Coal and Mining Sector

Coal and Mining Sector

[pib] The Mineral Laws (Amendment) Bill, 2020PIB


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Mining regulations in India

Parliament has passed The Mineral Laws (Amendment) Bill, 2020 for amendments in Mines & Mineral (Development and Regulation) Act 1957 and The Coal Mines (Special Provisions) Act, 2015. The bill will transform the mining sector in the country boosting coal production and reducing dependence on imports.

Acts to be amended

  • The MMDR Act regulates the overall mining sector in India.
  • The CMSP Act provides for the auction and allocation of mines whose allocation was cancelled by the Supreme Court in 2014.
  • Schedule I of the Act provides a list of all such mines; Schedule II and III are sub-classes of the mines listed in the Schedule I.
  • Schedule II mines are those where production had already started then, and Schedule III mines are ones that had been earmarked for a specified end-use.

Features of the Mineral Laws (Amendment) Bill, 2020 

Removal of restriction on end-use of coal

  • Currently, companies acquiring Schedule II and Schedule III coal mines through auctions can use the coal produced only for specified end-uses such as power generation and steel production.
  • The Bill removes this restriction on the use of coal mined by such companies.
  • Companies will be allowed to carry on coal mining operation for own consumption, sale or for any other purposes, as may be specified by the central government.

Eligibility for auction of coal and lignite blocks

  • The Bill clarifies that the companies need not possess any prior coal mining experience in India in order to participate in the auction of coal and lignite blocks.
  • Further, the competitive bidding process for auction of coal and lignite blocks will not apply to mines considered for allotment to:
  1. a government company or its joint venture for own consumption, sale or any other specified purpose; and
  2. a company that has been awarded a power project on the basis of a competitive bid for tariff.

Composite license for prospecting and mining

  • Currently, separate licenses are provided for prospecting and mining of coal and lignite, called prospecting license, and mining lease, respectively.
  • Prospecting includes exploring, locating, or finding mineral deposit.  The Bill adds a new type of license, called prospecting license-cum-mining lease.
  • This will be a composite license providing for both prospecting and mining activities.

Non-exclusive reconnaissance permits holders to get other licenses

  • Currently, the holders of non-exclusive reconnaissance permit for exploration of certain specified minerals are not entitled to obtain a prospecting license or mining lease.
  • Reconnaissance means preliminary prospecting of a mineral through certain surveys.
  • The Bill provides that the holders of such permits may apply for a prospecting license-cum-mining lease or mining lease.   This will apply to certain licensees as prescribed in the Bill.

Transfer of statutory clearances to new bidders

  • Currently,upon expiry, mining leases for specified minerals (minerals other than coal, lignite, and atomic minerals) can be transferred to new persons through auction.
  • This new lessee is required to obtain statutory clearances before starting mining operations.
  • The Bill provides that the various approvals, licenses, and clearances given to the previous lessee will be extended to the successful bidder for a period of two years.

Reallocation after termination of the allocations

  • The CMSP Act provides for the termination of allotment orders of coal mines in certain cases.
  • The Bill adds that such mines may be reallocated through auction or allotment as may be determined by the central government.
  • The central government will appoint a designated custodian to manage these mines until they are reallocated.

Prior approval from the central government

  • Under the MMDR Act, state governments require prior approval of the central government for granting reconnaissance permit, prospecting license, or mining lease for coal and lignite.
  • The Bill provides that prior approval of the central government will not be required in granting these licenses for coal and lignite, in certain cases.
  • These include cases where: (i) the allocation has been done by the central government, and (ii) the mining block has been reserved to conserve a mineral.

Advance action for auction

  • Under the MMDR Act, mining leases for specified minerals (minerals other than coal, lignite, and atomic minerals) are auctioned on the expiry of the lease period.
  • The Bill provides that state governments can take advance action for auction of a mining lease before its expiry.

With inputs from PRS India

Coal and Mining Sector

[pib] SARAS InitiativePIB


From UPSC perspective, the following things are important :

Prelims level : SARAS Initiative

Mains level : Not Much

Coal India’s flagship subsidiary NCL (Northern Coalfields Limited) has set up a centre named SARAS.

SARAS Initiative

  • SARAS stands for Science and Applied Research Alliance and Support.
  • It aims to promote innovation, R&D and skill development along with improving company’s operational efficiency and utilize resources at optimum level.
  • SARAS will help and enable the company in Integration of Innovation and Research for enhancing coal production, productivity, and safety in mines.
  • Besides, the SARAS would also help establish centres of excellence to ensure technical support to R&D along with thrust on quality skill development and employment to local youths in and around company’s operational area.

About NCL

  • NCL accounts for 15 per cent of India’s coal production and 10 per cent of thermal power generation of the country is met by the coal produced by this Miniratna Company of Govt. of India.
  • The company produces more than 100 million tonnes of coal every year.
  • It has planned to produce 107 million tonnes of coal in the current fiscal.
Coal and Mining Sector

[op-ed of the day] Let’s not muddle along on how we share natural endowmentsop-ed snap


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- Adoption of policy of auctioning of resources and periodic review of the policy.


Governments regulations and restrictions in the markets, believing that policies could artificially restrict either supply or demand, or both, often results in unrealistic or unworkable prices.

Adoption of the auctioning process to allocate resources

  • Design of process makes the difference: While auctions may be the cleanest way to allot scarce natural resources to private parties, their design makes all the difference.
  • Three things needed to get the desired results from auctions:
    • Clear policy goal: Define clear policy goals for the allotment of the resource whether coal blocks, spectrum or land.
    • The proper process of periodic review: Define a proper process for periodic review of the design itself, since it may not be possible to get everything right in the first instance.
    • Make the process non-partisan: Make the political oversight process as non-partisan as possible, so that regime changes do not keep upending policies.

What went wrong in spectrum allocation case?

  • Arbitrary tweaks in policy: Arbitrary tweaks were made in the telecom licence and spectrum allocation policy.
    • Which is what forced the apex court to intervene and cancel those licences.
  • The claim of revenue loss: Cancellation followed a  claim by the CAG that the “presumptive” revenue losses may have been as high as ₹1.76.
  • Result of the two events-policy of revenue maximisation: The net result was that all subsequent auctions were designed to maximize spectrum bids.
    • Winner’s curse: The policy finally ended up becoming a winner’s curse, evident in the pile of debt incurred by the telecom sector.
  • Why did this happen? This happened because of the absence of a clear policy goal.

Real estate sector

  • High land prices: The same goes for real estate, which is struggling right now due to high land prices because the bureaucracy prevents price reduction in land.
    • Unaffordable to middle-income buyers: That make most properties unaffordable for middle and lower-middle-income buyers.
  • Low FSI issue: Urban land prices are high due to artificial constriction of supplies through the fixing of low floor space indices (FSIs) even in land-scarce localities.

Technology and periodic review of policy

  • Technology can lower costs: Spectrum or land or coal mines are not always in short supply, for new technology lowers costs.
    • Efficient spectrum use: The same spectrum can, with the use of newer technology, be used more efficiently.
    • 3D printing in construction: Better infrastructure and improved building technologies (even 3D printing techniques for mass housing projects in non-urban areas) can lower housing costs enormously.
    • Automated coal mining: Automated coal mining can lower coal production costs, enabling higher profitability even with relatively high auction bids.
  • Need for periodic policy review: Technology can reduce the prices of the resources and hence the periodic review of the prices at which the resources are allocated need to be taken to for balanced pricing.


  • Policies on the allocation of scarce resources need to evolve based on actual experience and changing technologies and processes.
  • The success or failure of a specific policy cannot be judged purely from a revenue or transparency point of view.




Coal and Mining Sector

[op-ed snap] Mining deepop-ed snap


From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3-Changes in policy and their effects.


The government eased the regulations for coal mining in India.

What does the opening mean?

  • Removal of restrictions: Until now there were restrictions on who could bid for coal mines.
  • Only those in power, iron and steel and coal washery business could bid for mines.
  • The bidders needed the prior experience of mining in India.
  • Who can buy now?: The move will open up the coal mining sector completely, enabling anyone with finances and expertise to bid for blocks and sell the coal freely to any buyer of their choice.

Benefits of opening

  • More value extraction: The restrictions limited the potential bidders to a select circle of players and thus limited the value that the government could extract from the bidding.
  • Now the Government can extract more value from the auction of the blocks.
  • Development of coal market: Second, end-use restrictions inhibited the development of a domestic market for coal.
  • Job creation: Large investment will create jobs in the sector.
  • Increase in Demand: It will also set off demand in critical sectors such as mining equipment and heavy commercial vehicles.
  • Technology infusion: The country may also benefit from an infusion of sophisticated mining technology, especially for underground mines, if multinationals decide to invest.
  • Ease on Current account: In value terms, coal imports touched $26.18 billion in 2018-19, up from $15.76 billion in 2016-17.
  • This surge in coal imports, along with oil and electronics imports, has exerted pressure on the country’s current account in recent years.

Why the move matters

  • 70 % of energy production in India is coal-based.
  • Until now Coal India was the only commercial miner in the country for more than four decades accounting for 82 per cent of the coal production in the country.
  • The productivity of coal is still an issue in the country. Coal is a very crucial raw material that is used in the power sector and also in cement and metal sectors.

Way forward

The relaxation in regulations, along with previous initiatives such as allowing 100 per cent foreign direct investment through the automatic route in commercial coal production, can aid in boosting coal production in the country and help reduce imports.

Coal India Limited (CIL) has to be nurtured even as private players are welcomed.

Coal and Mining Sector

FDI in coal miningPriority 1


From UPSC perspective, the following things are important :

Prelims level : FDI

Mains level : Implication of FDI in coal sector

The Union Cabinet has approved an ordinance to amend two laws to ease mining rules, enabling foreign direct investment in coal mining.

About the Ordinance

  • At a Cabinet meeting chaired by PM the ordinance to amend the Mines and Minerals (Development and Regulation) Act, 1957 and the Coal Mines (Special Provisions) Act, 2015 was approved.

Benefits of the proposed FDI

  • The decision would boost the ease of doing business and increase the growth avenues.
  • The Coal India would be strengthened and the government was aiming at achieving production of one billion tonnes by 2023-2024.
  • The “end-use restrictions” had been done away with allowing “anyone to participate in the auction of coal blocks”.
  • The ordinance would strengthen the auction process of those mines whose leases were expiring on March 31, 2020. Seamless transfer of clearances would also be facilitated.


Foreign Direct Investment (FDI)

  • A FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
  • It is thus distinguished from a foreign portfolio investment by a notion of direct control.
  • FDI are commonly made in open economies that offer a skilled workforce and above-average growth prospects for the investor, as opposed to tightly regulated economies.
  • FDI frequently involves more than just a capital investment. It may include provisions of management or technology as well.
Coal and Mining Sector

Rare Earths ElementsPrelims Only


From UPSC perspective, the following things are important :

Prelims level : Rare earth elements and thier applications

Mains level : US-China trade war

The US Army plans to fund the construction of a Rare Earths processing facility to secure the domestic supply of minerals that are used to make military weapons and electronics.

This will be the first financial investment by the US military into commercial-scale Rare Earths production since the Manhattan Project to build the first atomic bomb during World War II.

Why such move?

  • The decision comes after China threatened to stop exporting Rare Earth materials to the US amid the ongoing trade war between the countries.
  • At present, China refines approximately 80%-90% of the world’s Rare Earths, thereby having substantial control over their supply.
  • While Rare Earth elements are used in building consumer electronics, in healthcare and transportation, they are especially important for governments because of their use in manufacturing defence equipment.

Rare Earths Elements

  • Rare Earth Elements or Rare Earth Metals are a set of 17 chemical elements in the periodic table — the 15 lanthanides, plus scandium and yttrium.
  • The 17 Rare Earths are cerium (Ce), dysprosium (Dy), erbium (Er), europium (Eu), gadolinium (Gd), holmium (Ho), lanthanum (La), lutetium (Lu), neodymium (Nd), praseodymium (Pr), promethium (Pm), samarium (Sm), scandium (Sc), terbium (Tb), thulium (Tm), ytterbium (Yb), and yttrium (Y).
  • They tend to occur in the same ore deposits as the lanthanides, and have similar chemical properties.
  • Despite their classification, most of these elements are not really “rare”.
  • One of the Rare Earths, promethium, is radioactive.
  • According to the Rare Earth Technology Alliance (RETA), the estimated size of the Rare Earth sector is between $10 billion and $15 billion.
  • About 100,000-110,000 tonnes of Rare Earth elements are produced annually around the world.


  • These elements are important in technologies of consumer electronics, computers and networks, communications, clean energy, advanced transportation, healthcare, environmental mitigation, and national defence, among others.
  • Scandium is used in televisions and fluorescent lamps, and yttrium is used in drugs to treat rheumatoid arthritis and cancer.
  • Rare Earth elements are used in space shuttle components, jet engine turbines, and drones.
  • Cerium, the most abundant Rare Earth element, is essential to NASA’s Space Shuttle Programme.
Coal and Mining Sector

Coalbed MethanePriority 1


From UPSC perspective, the following things are important :

Prelims level : Coalbed Methane

Mains level : Coalbed Methane and its utility


India has the fifth-largest coal reserves in the world, and CBM has been looked at as a clean alternative fuel with significant prospects.

Coalbed Methane (CBM)

  • CBM, like shale gas, is extracted from what are known as unconventional gas reservoirs — where gas is extracted directly from the rock that is the source of the gas (shale in case of shale gas and coal in case of CBM).
  • The methane is held underground within the coal and is extracted by drilling into the coal seam and removing the groundwater.
  • The resulting drop in pressure causes the methane to be released from the coal.

Uses of CBM

CBM can be used for power generation, as compressed natural gas (CNG) auto fuel, as feedstock for fertilisers, industrial uses such as in cement production, rolling mills, steel plants, and for methanol production.

Reserves in India

  • The country’s coal and CBM reserves are found in 12 states of India, with the Gondwana sediments of eastern India holding the bulk.
  • The Damodar Koel valley and Son valley are prospective areas for CBM development, with CBM projects existing in Raniganj coalfields, the Parbatpur block in Jharia coalfield and the East and West Bokaro coalfields.
  • The Son valley includes the Sonhat North and Sohagpur East and West blocks.
Coal and Mining Sector

[pib] PRAKASH  PortalPIB


From UPSC perspective, the following things are important :

Prelims level : PRAKASH portal

Mains level : Not Much

The Union Minister of State for Power and New & Renewable Energy (IC) has launched PRAKASH (Power Rail Koyla Availability through Supply Harmony) portal.


  • PRAKASH Portal is developed by NTPC and sources data from different stakeholders such as Central Electricity Authority (CEA), Centre for Railway Information System (CRIS) and coal companies.
  • The Portal aims at bringing better coordination for coal supplies among all stakeholders viz – Ministry of Power, Ministry of Coal, Coal India, Railways and power utilities.
  • This is an important step in ensuring adequate availability and optimum utilization of coal at thermal power plants.
  • The Portal is designed to help in mapping and monitoring entire coal supply chain for power plants, viz –
  1. Coal Stock at supply end (mines),
  2. Coal quantities/ rakes planned,
  3. Coal quantity in transit and
  4. Coal availability at power generating station.
  • All reports are available in PDF/Excel format. However, to present information in a user friendly method, the Portal gives graphical representation of reports with details shown on the map of India.

Benefits of Portal to the Stakeholders

The portal makes available following information on a single platform –

  • Coal company will be able to track stocks and the coal requirement at power stations for effective production planning
  • Indian Railways will plan to place the rakes as per actual coal available at siding and stock available at power stations.
  • Power stations can plan future schedule by knowing rakes in pipe line and expected time to Reach.
  • Stock at power generating station
  • Ministry of Power /Ministry of Coal/ CEA/ POSOCO can review overall availability of coal at thermal power plants in different regions
Coal and Mining Sector

GoldschmidtitePrelims Only


From UPSC perspective, the following things are important :

Prelims level : Goldschmidtite

Mains level : Earth's interior

  • A new, curious mineral has been discovered inside a diamond unearthed from a mine in South Africa.


  • The mineral has been named goldschmidtite, after Victor Moritz Goldschmidt, the Norwegian scientist acknowledged as the founder of modern geochemistry.
  • Goldschmidtite has an unusual chemical signature for a mineral from Earth’s mantle, according to the University of Alberta, a student of which discovered it.


  • While the mantle is dominated by elements such as magnesium and iron, goldschmidtite has high concentrations of niobium, potassium and the rare earth elements lanthanum and cerium.
  • It is dark green and opaque.
  • Though the mantle makes up about 80 per cent of the Earth’s volume, very little is known about it.
  • Reaching the mantle is not easy; it is about 2,900 km thick and no attempt to drill into it has been successful.
  • Diamonds hold clues as they are found up to 160 km beneath the surface, in the upper mantle.
  • Diamonds that are unearthed were brought up closer to the surface, probably as a result of violent volcanic eruptions when the Earth was hotter, according to the Smithsonian Magazine.
Coal and Mining Sector

Coal GasificationPriority 1


From UPSC perspective, the following things are important :

Prelims level : Coal Gasification

Mains level : Benefits of Coal Gasification

  • Recently Odisha’s Talcher fertilizer plant was awarded a contract for starting a coal gasification unit for the production of urea and Ammonia.
  • The decision is geared towards reducing India’s reliance on imports and helping the country meet its CoP-21 Paris Agreement commitments.

What is Coal Gasification?

  • Coal gasification is the process of converting coal into synthesis gas (also called syngas), which is a mixture of hydrogen (H2), carbon monoxide (CO) and carbon dioxide (CO2).
  • The syngas can be used in a variety of applications such as in the production of electricity and making chemical products, such as fertilizers.
  • The coal gasification process holds good potential in the future, with coal being the most abundantly available fossil fuel across the world, and that even low-grade coal can be used in the process.

Why opt coal gasification?

  • Urea is currently produced using pooled natural gas, which comprises of both domestic natural gas and imported LNG.
  • The usage of locally available coal for making fertilizers would help reduce the import of LNG.
  • The Ministry also said that India currently imports 50 to 70 lakh tonnes of urea every year, and that the revival of the units would help increase the availability of domestically produced fertilizers.
  • The project’s environment-friendliness would help India in meeting its commitments under the CoP-21 Paris Agreement.
Coal and Mining Sector

‘Samudrayaan’ ProjectPriority 1


From UPSC perspective, the following things are important :

Prelims level : ‘Samudrayaan’ Project

Mains level : India's Deep Ocean Mission

  • India’s ambition to send men to the deep sea in a submersible vehicle is likely to be a reality in 2021-22 with the ‘Samudrayaan’ project.
  • It will be a part of the ‘Deep Ocean Mission’ that has received in-principle approval but is awaiting a final nod from the Union Finance Ministry.

‘Samudrayaan’ project

  • The ‘Samudrayaan’ is a part of the Ministry of Earth Sciences’ pilot project for deep ocean mining for rare minerals.
  • The project proposes to send a submersible vehicle with three persons to a depth of about 6000 metres to carry out deep underwater studies.
  • The project is undertaken by the National Institute of Ocean Technology (NIOT), Chennai in line with the ISRO’s ambitious ‘Gaganyaan’ mission of sending an astronaut to space by 2022.
  • The indigenously developed vehicle is capable of crawling on the sea bed at a depth of six kilometre for 72 hours.
  • The project proposes to carry three persons in a submersible vehicle to a depth of 6000 metres under sea for various studies. Submarines go only about 200 metres.

Why such mission?

  • India has been allocated a site of 75,000 sq km in the Central Indian Ocean Basin by the International Sea Bed Authority for exploration of polymetallic nodules from seabed.
  • The estimated resource of polymetallic nodules is about 380 million tonnes, containing 4.7 million tonnes of nickel, 4.29 million tonnes of copper and 0.55 million tonnes of cobalt and 92.59 million tonnes of manganese.


  • The success of the ‘Samudrayaan’ will help India to join the league of developed nations in exploration of minerals from oceans.
  • Such missions had already been carried by developed countries and India could be the first among the developing nations.
Coal and Mining Sector

Explained:  India’s Deep Ocean MissionExplained


From UPSC perspective, the following things are important :

Prelims level : Deep Ocean Mission

Mains level : Deep Ocean Mission and its benefits

  • India’s ambitious ‘Deep Ocean Mission’ is all set to be launched this October.

Deep Ocean Mission (DOM)

  • Nodal Agency: Ministry of Earth Sciences (MoES)
  • The mission proposes to explore the deep ocean similar to the space exploration started by ISRO.
  • Underwater robotics and ‘manned’ submersibles are key components of the Mission which will help India harness various living and non-living (water, mineral and energy) resources from the seabed and deep water.
  • The tasks that will be undertaken over this period include deep-sea mining, survey, energy exploration and the offshore-based desalination.
  • These technological developments are funded under an umbrella scheme of the government – called Ocean Services, Technology, Observations, Resources Modelling and Science (O-SMART).

 Mining PMN

  • One of the main aims of the mission is to explore and extract polymetallic nodules (PMN).
  • These are small potato-like rounded accretions composed of minerals such as manganese, nickel, cobalt, copper and iron hydroxide.
  • They lie scattered on the Indian Ocean floor at depths of about 6,000 m and the size can vary from a few millimetres to centimetres.
  • These metals can be extracted and used in electronic devices, smartphones, batteries and even for solar panels.

Where will the team mine?

  • The International Seabed Authority (ISA), an autonomous international organisation established under the 1982 United Nations Convention on the Law of the Sea, allots the ‘area’ for deep-sea mining.
  • India was the first country to receive the status of a ‘Pioneer Investor ‘ in 1987 and was given an area of about 1.5 lakh sq km in the Central Indian Ocean Basin (CIOB) for nodule exploration.
  • In 2002, India signed a contract with the ISA and after complete resource analysis of the seabed 50% was surrendered and the country retained an area of 75,000 sq km.
  • According to a release from the Ministry of Earth Sciences, the estimated PMN resource potential in this area is 380 million tonnes (MT), containing 4.7 MT of nickel, 4.29 MT of copper, 0.55 MT of cobalt and 92.59 MT of manganese.
  • Further studies have helped narrow the mining area to 18,000 sq km which will be the ‘First Generation Mine-site’.

Which are the other countries that are in the race to mine the deep sea?

  • Apart from the CIOB, polymetallic nodules have been identified from the central Pacific Ocean. It is known as the Clarion-Clipperton Zone.
  • According to the ISA’s website, it has entered into 15-year contracts for exploration for polymetallic nodules, polymetallic sulphides and cobalt-rich ferromanganese crusts in the deep seabed with 29 contractors.
  • Later it was extended for five more years till 2022.
  • China, France, Germany, Japan, South Korea, Russia and also some small islands such as the Cook Islands, Kiribati have joined the race for deep sea mining.
  • Most of the countries have tested their technologies in shallow waters and are yet to start deep-sea extraction.

India’s preparedness

  • India’s mining site is at about a depth of 5,500 metres, where there is a high pressure and extremely low temperature.
  • We have also deployed Remotely Operated Vehicle and In-situ Soil Tester in the depth of 6,000 metres and have a thorough understanding of the mining area at the Central Indian Ocean Basin.
  • The mining machine newly developed for 6000 metres depth was able to move about 900 metres and will be deployed soon at 5,500 metres.
  • Weather conditions and availability of ships also play a role.
  • More tests are being conducted to understand how to bring the nodules up to the surface. A riser system comprising an umbilical cable or electromechanical cable and a hose is being developed.

What will be the environmental impact?

  • According to the IUCN these deep remote locations can be home to unique species that have adapted themselves to conditions such as poor oxygen and sunlight, high pressure and extremely low temperatures.
  • Such mining expeditions can make them go extinct even before they are known to science.
  • The deep sea’s biodiversity and ecology remain poorly understood, making it difficult to assess the environmental impact and frame adequate guidelines.
  • Though strict guidelines have been framed, they are only exploration guidelines. A new set of exploitation guidelines are being worked out and discussions are on with the ISA.
  • Environmentalists are also worried about the sediment plumes that will be generated as the suspended particles can rise to the surface harming the filter feeders in the upper ocean layers.
  • Additional concerns have been raised about the noise and light pollution from the mining vehicles and oil spills from the operating vessels.

Is deep sea mining economically viable?

  • The latest estimate from the ISA says it will be commercially viable only if about three million tonnes are mined per year.
  • More studies are being carried out to understand how the technology can be scaled up and used efficiently.
Coal and Mining Sector

Khanij Bidesh India Ltd. (KABIL)PIB


From UPSC perspective, the following things are important :

Prelims level : KABIL

Mains level : Mining sector of India

Khanij Bidesh India Ltd. (KABIL)

  • A joint venture company namely Khanij Bidesh India Ltd. (KABIL) is to be set up with the participation of three Central Public Sector Enterprises namely, National Aluminium Company Ltd.(NALCO), Hindustan Copper Ltd.(HCL) and Mineral Exploration Company Ltd. (MECL).
  • The objective of constituting KABIL is to ensure a consistent supply of critical and strategic minerals to Indian domestic market.
  • While KABIL would ensure mineral security of the Nation, it would also help in realizing the overall objective of import substitution.
  • The equity participation between NALCO, HCL and MECL is in the ratio of 40:30:30.

Why need KABIL?

  • The sustained source of mineral and metal commodities is imperative for the transportation and manufacturing segment. R
  • ecalling the commitment at the UN Climate Change Conference, Pairs, 2015, where India has pledged to reduce greenhouse gas emissions and opting a greener mode of transportation byemphasizing upon Electric Vehicle Mobility.
  • It is therefore important to ensure energy storage through batteries.
  • Among such twelve minerals identified as strategic minerals, which have meagre resource base, Lithium Cobalt are significant.

What will KABIL do?

  • The KABIL would carry out identification, acquisition, exploration, development, mining and processing of strategic minerals overseas for commercial use and meeting country’s requirement of these minerals.
  • The sourcing of these minerals or metals is to done by creating trading opportunities, G2G collaborations with the producing countries or strategic acquisitions or investments in the exploration and mining assets of these minerals in the source countries.
  • The new company will help in building partnerships with other mineral rich countries like Australia and those in Africa and South America, where Indian expertise in exploration and mineral processing will be mutually beneficial bringing about new economic opportunities.
Coal and Mining Sector

[pib] Red MudPIB


From UPSC perspective, the following things are important :

Prelims level : Red Mud

Mains level : Not Much

  • In a step towards productive utilization of bauxite residue, commonly known as the ‘Red Mud’, an interactive workshop called ‘Waste To Wealth’ was organized by Ministry of Mines in New Delhi.

What is Red Mud?

  • Red mud is a side-product of the Bayer process, the principal means of refining bauxite en route to alumina.
  • This is an environmental concern due to presence of impurities such as caustic soda and others minerals.
  • Global generation of red mud is more than 150 million tons and there exists a global inventory of more than 3 billion tons.
  • It is composed of a mixture of solid and metallic oxides. The red colour arises from iron oxides, which comprise up to 60% of the mass.
  • The mud is highly basic with a pH ranging from 10 to 13. In addition to iron, the other dominant components include silica, unleached residual alumina, and titanium oxide.
Coal and Mining Sector

Graphite mining in Arunachal PradeshPrelims OnlyStates in News


From UPSC perspective, the following things are important :

Prelims level : Graphite and its properties

Mains level : India-China Border Issues

  • Arunachal Pradesh has asked the Geological Survey of India (GSI) to explore the possibility of surveying and drilling for minerals along the India-China border.

What is Graphite?

  • Graphite is a naturally-occurring form of crystalline carbon.
  • It is a native element mineral found in metamorphic and igneous rocks.
  • It is extremely soft, cleaves with very light pressure, and has a very low specific gravity.
  • It is the only non-metal element that is a good conductor of electricity.
  • It is also known as a dry lubricant for its greasy feel.

Why mine in Arunachal?

  • Beijing is carrying out “massive” mining activities very close to the border in the Tibet Autonomous Region.
  • Arunachal could be the leading producer of graphite, going a long way in cutting down India’s import of the mineral.

Arunachal holds highest deposits of graphite

  • The GSI presented the status of mineral deposits in Arunachal Pradesh at the meeting.
  • Data showed that the State has 35% of the total graphite reserves in India – the highest in the country.
  • The GSI’s 2013 report showed Arunachal Pradesh sits on 43% of the country’s graphite resources followed by Jammu & Kashmir (37%), Jharkhand (6%), Tamil Nadu (5%), and Odisha (3%).
  • But in terms of resources, Tamil Nadu led with 37% followed by Jharkhand with 30% and Odisha with 29%.
Coal and Mining Sector

Sand, a global sustainability challenge: UN reportIOCRPriority 1


From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Illegal sand mining in India

  • The UNEP has released a report, Sand and Sustainability: Finding new solutions for environmental governance of global sand resources.
  • It highlights a problem that has largely stayed under the radar: sand consumption globally has been increasing and we are extracting it at rates exceeding natural replenishment rates.

Sand Mining

  • Sand and gravel are the second largest natural resources extracted and traded by volume after water, but among the least regulated.
  • Sand is created by slow geological processes, and its distribution is not even.
  • Desert sand, available in plenty, is not suited for construction use because it is wind-smoothed, and therefore non-adherent.
  • While 85% to 90% of global sand demand is met from quarries, and sand and gravel pits, the 10% to 15% extracted from rivers and sea shores is a severe concern due the environmental and social impacts.
  • Aggregates (a term for crushed rock, sand and gravels used in construction materials) are necessary for building the infrastructure the world needs, especially developing countries bringing their populations out of poverty.
  • Quoting studies, the report estimates that a 40-50 billion tonne of crushed rock, sand and gravel is extracted from quarries, pits, rivers, coastlines and the marine environment each year.
  • The construction industry consumes over half of this, and will consume even more in the future.

Hazards of excessive mining

  • Their extraction often results in river and coastal erosion and threats to freshwater and marine fisheries and aquatic ecosystems, instability of river banks leading to increased flooding, and lowering of ground water levels.
  • The report notes that China and India head the list of critical hotspots for sand extraction impacts in rivers, lakes and on coastlines.
  • Most large rivers of the world have lost between half and 95% of their natural sand and gravel delivery to ocean the report says.
  • The damming of rivers for hydro-electricity production or irrigation is reducing the amount of sediment flowing downstream.
  • This broken replenishment system exacerbates pressures on beaches already threatened by sea level rise and intensity of storm-waves induced by climate change, as well as coastal developments.
  • There are also indirect consequences, like loss of local livelihoods — an ironic example is that construction in tourist destinations can lead to depletion of natural sand in the area, thereby making those very places unattractive — and safety risks for workers where the industry is not regulated.

China and India: Leading in global infrastructure

  • China increased its concrete use by 540% in the last 20 years, exceeding the use of all the other countries combined.
  • Even as domestic consumption rates begin to stabilize, China overseas investment in infrastructure development through the Belt and Road Initiative will drive demand for aggregates in approximately 70 countries.
  • Furthermore, domestic demand in India is expected to drive strong future growth in Asia.

India leads in reusing

  • The alternative substitute materials the report points to, are several from India, including oil palm shell, waste foundry sand, crushed tiles, granite powder, mine waste, bottom ash, and discarded rubber.
  • It also cites the use in India of non-toxic municipal waste in road-building.

Way Forward

  • The report suggests better spatial planning and reducing unnecessary construction — including speculative projects or those being done mainly for prestige — thereby making more efficient use of aggregates.
  • It calls for investing in infrastructure maintenance and retrofitting rather than the demolish and rebuild cycle, embracing alternative design and construction methods, even avoiding use of cement and concrete where possible, and using green infrastructure.
  • The report concludes with a call for large-scale multipronged actions from global to local levels, involving public, private and civil society organisations.
  • This will mean building consensus, defining what success would look like, and reconciling policies and standards with sand availability, development imperatives and standards and enforcement realities.
Coal and Mining Sector

[pib] National Mineral Policy, 2019PIB


Mains Paper 2: Governance | Government policies & interventions for development in various sectors & issues arising out of their design & implementation

From UPSC perspective, the following things are important:

Prelims level:  National Mineral Policy, 2008

Mains level: Read the attached story


  • The Union Cabinet has approved National Mineral Policy 2019.
  • National Mineral Policy 2019 replaces the extant National Mineral Policy 2008 (“NMP 2008”) which was announced in year 2008.

National Mineral Policy, 2019

Key features

  • The 2019 Policy proposes to grant status of industry to mining activity to boost financing of mining for private sector and for acquisitions of mineral assets in other countries by private sector.
  • It also mentions that Long term import export policy for mineral will help private sector in better planning and stability in business.
  • The Policy also mentions rationalize reserved areas given to PSUs which have not been used and to put these areas to auction, which will give more opportunity to private sector for participation.
  • It also mentions to make efforts to harmonize taxes, levies & royalty with world benchmarks to help private sector.

Other Features

  • NMP 2019 proposes a long term export import policy for the mineral sector to provide stability and as an incentive for investing in large scale commercial mining activity.
  • Regarding the role of state in mineral development online public portal with provision for generating triggers at higher level in the event of delay of clearances has been put in place.
  • NMP 2019 aims to attract private investment through incentives while the efforts would be made to maintain a database of mineral resources and tenements under mining tenement systems.
  • The new policy focuses on use coastal waterways and inland shipping for evacuation and transportation of minerals and encourages dedicated mineral corridors to facilitate the transportation of minerals.
  • The utilization of the district mineral fund for equitable development of project affected persons and areas.

Inter-Generational Equity

  • The 2019 Policy also introduces the concept of Inter-Generational Equity that deals with the well-being not only of the present generation but also of the generations to come.
  • It also proposes to constitute an inter-ministerial body to institutionalize the mechanism for ensuring sustainable development in mining.
Coal and Mining Sector

[pib] Labour Ministry notifies rules to allow employment of Women in MinesPIB


Mains Paper 3: Economy | Development & Employment

From UPSC perspective, the following things are important:

Prelims level: Mines Act, 1952 and newly added norms

Mains level: Equality of opportunity for Women


  • The Central Government has exempted the women employed in any mine above ground and in any mine below ground from the provisions of section 46 of the Mines Act, 1952, subject to following conditions.

In the case of women employed in any mine above ground

  • The owner of a mine may deploy women between the hours of 7 pm and 6 am in the mine above ground including opencast workings;
  • the deployment of women shall be after obtaining the written consent of the concerned woman employee;
  • the women so deployed shall be provided with adequate facilities and safeguards regarding occupational safety, security and health;
  • the deployment of women shall be subject to the framing and implementation of Standard Operating Procedures on the basis of the guidelines issued in this regard by the Chief Inspector of Mines from time to time;
  • the deployment of women shall be in a group of not less than three in a shift.

In the case of women employed in any mine below ground

  • The owner of a mine may deploy women between the hours of 6 am and 7 pm in technical, supervisory and managerial work where continuous presence may not be required;
  • the deployment of women shall be after obtaining the written consent of the concerned woman employee;
  • the women so deployed shall be provided with adequate facilities and safeguards regarding occupational safety, security and health;
  • the deployment of women shall be subject to the framing and implementation of Standard Operating Procedures on the basis of the guidelines issued in this regard by the Chief Inspector of Mines from time to time;
  • the deployment of women shall be in a group of not less than three.

Why such move?

  1. The Mines Act, 1952, restricted the employment of women in underground mines and also in opencast or aboveground workings of the mine during night hours between 7PM and 6AM.
  2. Several women employees groups, industry and students has enrolled with various institutions pursuing mining engineering courses at degree and diploma levels.
  3. They have been representing to the government at different forum that women should be provided equal employment opportunity for working in mines.
Coal and Mining Sector

Should district mineral foundations be with state mining departments?States in News


Mains Paper 2: Governance | Mechanisms, laws, institutions and Bodies constituted for the protection and betterment of the vulnerable sections.

From UPSC perspective, the following things are important:

Prelims level: DMF

Mains level: Welfare of the mining affected people


  • The Odisha government is planning to move its district mineral foundations (DMF) to its steel and mines department from the planning and convergence department.

District Mineral Foundation

  1. DMF is a trust set up as a non-profit body, in those districts affected by the mining works, to work for the interest and benefit of persons and areas affected by mining related operations.
  2. It is funded through the contributions from miners.
  3. Its manner of operation comes under the jurisdiction of the relevant State Government.
  4. The DMF were mandated through the Mines and Minerals (Development & Regulation) Amendment Act, (MMDRA) 2015.

Contributions to DMF

  1. Every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the DMF of the district in which their mining operations are carried on.
  2. Miners have to contribute an amount equal to 30% of the royalty payable by them to the DMFs.
  3. If the mining area is spread across several districts, the fund is shared on a pro-rata basis by these districts.
  4. DMF contribution would not be exceeding one-third of royalty and the Central Government retains the power to prescribe the rates of contribution, though DMF’s operation is under state governments.
  5. The contributions made to DMFs are collected by the State Governments and the details in this regard are not maintained centrally at the moment.

Why such move by Odisha?

  1. Odisha is the only one in India, where the planning department is the nodal authority for DMFs.
  2. Elsewhere, they are under respective mines departments, as money for them is generated from mining companies operating in affected districts.
  3. The amount is determined on the basis of the royalty that companies pay to mines departments.
  4. The plan aims to improve implementation and use of funds.
  5. Odisha has more than Rs 5,800 crore in DMFs, the most in India (total Rs 23,000 crore), owing to key mining districts such as Keonjhar, Sundargarh and Angul.

Priority areas under DMF

The various state DMF rules and the Pradhan Mantri Khanij Khestra Kalyan Yojana (PMKKKY) guidelines stipulate some “high priority” issues for DMFs, including

  • drinking water
  • health
  • women and child welfare
  • education
  • livelihood and skill development
  • welfare of aged and disabled
  • sanitation

Is the mines department, a suitable custodian?

  1. Its objectives and aims make it clear that DMFs are meant to alleviate poverty and improve human development indicators.
  2. Hence they are more aligned to state and district planning departments along with other concerned departments that overlook the high priority issues.
  3. The mining department is only concerned with the source of funds.
  4. The primary role of the mining department is in fact mineral development and not human development.

A reasonable move

  1. Placing DMFs under the state planning and convergence department is in fact a very reasonable step that Odisha had taken.
  2. Since proper planning is crucial for effective functioning of DMFs and ensuring that the money is spent well, it makes sense to place it under this department.
  3. Also convergence with certain poverty alleviation and human development schemes is important for DMFs.

Way Forward

  1. With significant financial corpus, DMFs can help improve the reach and delivery of these schemes. These include critical issues such as child nutrition, healthcare, education, livelihood, welfare of old and disabled etc.
  2. Therefore, restricting DMF to the state mining departments will only limit its scope and effective operation as well as optimal utilisation of funds.
Coal and Mining Sector

[op-ed snap] Death traps: on Meghalaya’s illegal minesop-ed snap


Mains Paper 3: Environment| Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: NGT, Geographical Aspects of Meghalaya

Mains level: The newscard discusses issues related to illegal mining in a brief manner.


  • The tardy response of the Centre and the State of Meghalaya to the plight of at least 15 workers trapped in a rat-hole coal mine since mid-December has exposed the extraordinary indifference in government to labour welfare and the law.


  1. Ongoing efforts to reach victims of a mining disaster in northeastern India have exposed what campaigners say is poor enforcement against such illegal mines, where undocumented workers risk injury or death.
  2. Environmental concerns have led to India imposing bans on the mining of coal, mica and sand, among other minerals. Yet, workers across the country continue to put themselves at risk as illegal mining continues.
  3. The most recent disaster highlighted the dangers of so-called “rat-hole” mines, where workers crawl into narrow shafts on bamboo ladders to extract low-quality coal.
  4. In Meghalaya, it is estimated that 5,000 rat-hole mines continue to function despite a ban imposed in 2014 by India’s environmental court, the National Green Tribunal.

Why is it very prevalent?

  1. In Jharkhand, the coal layer is extremely thick, where open-cast mining can be done.
  2. But no other method would be economically viable in Meghalaya, where the coal seam is extremely thin.
  3. Removal of rocks from the hilly terrain and putting up pillars inside the mine to prevent collapse would be costlier.
  4. So despite a ban, rat-hole mining remains the prevalent procedure for coal mining in Meghalaya.
  5. Rat-hole mining is the locally developed technique and the most commonly used one.
  6. It is not regulated by any law, and coal extraction has been made by unscrupulous elements in a most illegal and unscientific manner.
  7. Meghalaya’s annual coal production of nearly 6 million tonnes is mostly said to have come through rat-hole mining.

What are the impacts?


  • Rat-hole mining in Meghalaya had caused the water in the Kopili river (flows through Meghalaya and Assam) to turn acidic.
  • The entire roadsides in and around mining areas are used for piling of coal.
  • This is getting to be a major source of air, water and soil pollution.
  • Off road movement of trucks and other vehicles in the area causes further damage to the ecology of the area.

Risk to lives

  • Due to rat-hole mining, during the rainy season, water flood into the mining areas resulting in death of many.
  • If water has seeped into the cave, the worker can enter only after the water is pumped out.

Does Meghalaya not have a policy?

  • The NGT finds the 2012 policy inadequate. The policy does not address rat-hole mining and instead states: “Small and traditional system of mining by local people in their own land shall not be unnecessarily disturbed.”
  • In its 2015 order, the NGT observed: “The State of Meghalaya has promulgated a mining policy of 2012, which does not deal with rat-hole mining, but on the contrary, deprecates it.


Trafficked workers

  1. Illegal mining tends to attract workers from around India and neighbouring countries who are lured by the promise of relatively high wages, but are faced with dangerous conditions once they arrive.
  2. Workers in the coal mines are promised about 2,000 rupees ($28.46) per day, more than 10 times the average Indian daily wage.
  3. When the anti-trafficking charity Impulse NGO Network surveyed rat-hole mines in Meghalaya between 2007 and 2013, it found 1,200 children, many of whom were trafficked from Nepal and Bangladesh.

Mining -A death trap

  1. India is one of the world’s most dangerous countries to be a coal miner, with one miner dying every six days on average in 2017, according to government data.
  2. The number is likely even larger, as deaths in illegal mines are common but often go unreported.

State apathy

  1. Although the primary responsibility for the operation of illegal mines lies with the State government, the Meghalaya government has been evasive on the issue of the continued operation of the illegal mines, in spite of the adverse findings of the Justice B.P. Katoki committee appointed by the NGT.
  2. As reported by the Katoki panel, it could be of the order of 24,000 mines, majority of them were operating illegally.
  3. Illegal mines continue to operate is flagrant violation of rules under the Mines and Minerals (Development and Regulation) Act, the responsibility lies with the State government.
  4. Parliament was informed that 22 States had constituted a task force to review illegal mining and act on it, but Meghalaya does not figure in that list.

Way Forward

  1. State governments need to draw up protocols on how to monitor and enforce bans against illegal mining, while the central government must follow up as well.
  2. The State government should implement reforms and diversify employment away from dirty mining under primitive conditions over the years,
  3. The Justice B.P. Katoki committee had sought a ban on coal mining in Meghalaya. It had also taken into account some reports of the state pollution control board.
  4. It is the responsibility of the Centre and the State to rehabilitate the workers from impoverished communities, reportedly including some child labourers, who are ready to undertake the risky labour.


Rat hole mining

  • It is a primitive and hazardous method of mining for coal, involves digging of very small tunnels, usually only 3-4 feet high, which workers (often children) enter and extract coal.
  • Rat-hole mining is broadly of two types. “In side-cutting procedure, narrow tunnels are dug on the hill slopes and workers go inside until they find the coal seam.
  • In the other type of rat-hole mining, called box-cutting, a rectangular opening is made, varying from 10 to 100 sq m, and through that is dug a vertical pit, 100 to 400 feet deep.
  • Once the coal seam is found, rat-hole-sized tunnels are dug horizontally through which workers can extract the coal.
Coal and Mining Sector

[op-ed snap] A coal commission for Indiaop-ed snap


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Coal commission of India


  1. Renewable energy will replace coal as most important part of our energy mix
  2. After a few years of renewable energy (RE) deployment, supplemented by unprecedented declines in RE prices, the consensus around RE seems to be clear: Within a few decades, RE will become an increasing part of India’s energy mix replacing coal.

Why we need a coal commission?

  1. India’s thermal coal base, which still provides over 60 per cent of the country’s overall generation, is still growing .
  2. Roughly 15-20 million people in the coal belt are dependent on the coal industry, either directly or indirectly, for their livelihood.
  3. The comparative geography of India’s wind and solar resources versus coal makes one thing abundantly clear: RE jobs will not be coming to the coal belt in large numbers.

Importance of public investment and PSU for Coal belt

  1. Many coal-bearing states are also in the bottom third by income per capita (Jharkhand, MP, Odisha, Chhattisgarh and West Bengal in ascending order).
  2. But one of the big benefits of public investments is that they can be guided.
  3. This is already visible from the way the current government has been taking financial surpluses from both the NTPC and Coal India to invest in solar power, fertiliser plants, and other areas far from the core business areas of these companies.
  4. In fact, for all the criticisms of the public sector, one of its greatest achievements is that PSUs have continued to operate in eastern India for decades, despite the political complexities, adverse business environment, and infrastructural constraints that accompany the region.
  5. While large private investment has largely evaded the coal belt, PSUs like Coal India have built up considerable social and political capital in these regions which allow them to conduct business.

Questions coal commission will consider:

  1. It will consider the future of India’s coal industry, and the PSUs engaged in these industries.
  2. Can this social and political capital be used to pivot towards other activities?
  3. Can companies like Coal India become diversified national champions as part of a new industrial policy for the coal belt?
  4. Can Indian coal be used for non-combustion purposes and what technologies would be necessary for such a transition?

Way forward

  1. Ultimately, an Indian “coal commission” needs to articulate a credible economic future for the coal belt and the companies that exist there.
  2. As the latest COP in Katowice (Poland’s coal capital) delivers another disappointing outcome, it is clear that international financing for coal projects is an unrealistic expectation.
  3. Instead, if the Indian state can engage in some good old long-term planning it can anticipate and prevent the large-scale economic distress which will be experienced in eastern India with the decline of the coal industry.
Coal and Mining Sector

[op-ed snap] Turning dirty coal into clean energyop-ed snap


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Prospects of methanol and how India can leverage this promising fuel


Using India’s coal reserves to satisfy energy demand

  1. India’s gross domestic product (GDP) is expected to have grown at 6.7% in 2017-18, which could rise to 8% in the future depending on the effectiveness of economic reforms
  2. As GDP growth is positively correlated to energy requirement, we can expect strong energy demand in the coming years
  3. Given that India is rich in coal reserves, there could be a way in which we can create clean energy security through coal to meet our growing demand

Energy challenge

  1. The energy consumption is expected to grow at a compounded annual growth rate (CAGR) of 4.87%
  2. The worrying part is that energy consumption growth is weighted towards fossil fuel (coal + crude oil) consumption, which is an environmental challenge
  3. The challenge is greater because of our excessive dependence on the import of crude oil (81% of total crude oil consumption), and because Indian coal comprises mostly of inferior non-coking coal (67% of total coal deposits) which causes more air pollution
  4. India’s energy security needs are at odds with her Conference of the Parties 21—Intended Nationally Determined Contributions (COP21-INDC) targets

Moving towards Methanol Economy

  1. We can achieve clean energy security by adopting technological advancements in converting coal to methanol, a liquid fuel
  2. Methanol, which can be derived from coal, can be blended in petrol
  3. Dimethyl ether (DME), which can be further derived from methanol can be blended in diesel, as well as in liquefied petroleum gas (LPG) for cooking
  4. Collectively, this coal conversion to methanol and its derivatives is referred to as “methanol economy” and suggests a future economy in which methanol and DME could potentially replace fossil fuels
  5. Niti Aayog has laid out its vision to blend 15% methanol in petrol (M15) and 20% DME in diesel (DM20)

Impact on India

  1. Using Indian coal to produce methanol can generate a huge positive impact on the Indian economy and environment
  2. With the reduction of import dependence of crude oil and utilization of our own resources, we will enhance our self-reliance in the energy sector
  3. Coal to methanol will also help reduce the air pollution that our cities battle with
  4. According to the World Health Organization’s Global Urban Ambient Air Database, nine out of the 20 most polluted cities are in India for PM2.5

How can methanol blend help?

  1. Implementing M15 and DM20 blends can enable the existing fleet of automobiles to reduce emissions with minimal retrofit modifications, thereby making a much bigger impact than any prospective technologies
  2. India’s current focus on upgrading to Bharat Stage-VI fuels will require significant technology improvement in automobiles, without which there will hardly be any impact on air quality
  3. Another initiative—shifting to electric vehicles (EVs)—will take significant time as it is not a mainstream technology either globally or in India

The problem of storing electricity

  1. Traditionally, coal has been burnt in thermal power plants to generate electricity
  2. As electricity cannot be stored economically, it must be sold instantaneously at the price prevailing in the electricity market, leading to losses for distribution companies (discoms)
  3. The conventional burning of coal in thermal power plants releases particulate matter, whereas particulate matter emission is almost eliminated in case of converting coal to liquid fuels
  4. Liquid fuels (methanol and DME) can be stored economically over a long time and command a higher value in the commodities market

Way forward

  1. With the rising focus on renewable energy, the average plant load factor across states and private thermal power plants has gone below 60% and resulted in poor offtake of coal, thereby jeopardizing the future of coal sector
  2. Coal-to-methanol fuels could potentially turn around the dwindling fortunes of the coal industry and save it from obsolescence
Coal and Mining Sector

Centre widens petroleum’s definition to cover more hydrocarbonsPrelims OnlyPriority 1


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, and Railways etc.

From UPSC perspective, the following things are important:

Prelims level: HELP, new definition of HCs

Mains level: India’s energy security concerns and measures taken to overcome them.


Context: The government has amended the Petroleum and Natural Gas Rules 1959 to include shale in the definition of petroleum, a change that would allow private companies to explore and produce the resource in the blocks they already operate.

Redefining Hydrocarbons

  1. The Ministry of Petroleum and Natural Gas has liberalised the definition of petroleum to bring more hydrocarbons such as coal bed methane and shale gas under its fold.
  2. According to the gazette notification for the Petroleum and Natural Gas (Amendment) Rules, 2018, petroleum will now mean naturally occurring hydrocarbons, whether in the form of natural gas, in a liquid, viscous or solid form, or a mixture of these.
  3. It, however, does not include coal, lignite and helium occurring in association with petroleum or coal or shale, the notification said.
  4. Till now the definition of ‘petroleum’ only meant any liquid hydrocarbon or a mixture of hydrocarbons and any inflammable mixture (liquid, viscous or solid) containing a liquid hydrocarbon.

In line with the HELP

  1. The new HELP allows producers to harness any hydrocarbon resource they find within the assigned area subject to a revenue-share commitment.
  2. The earlier definition had excluded shale and other such hydrocarbons, hampering their exploration and production in the country.
  3. This should help in enhancing domestic exploration and production of hydrocarbons, thereby increasing India’s energy security and reducing our dependence on imports.


Hydrocarbon Exploration and Licensing Policy (HELP)

  1. It is a policy adopted by Government of India on 10.03.2016 indicating the new contractual and fiscal model for award of hydrocarbon acreages towards exploration and production (E&P).
  2. HELP is applicable for all future contracts to be awarded.
  3. HELP replaces the present policy regime for exploration and production of oil and gas, known as New Exploration Licensing Policy (NELP), which has been in existence for 18 years.
  4. Features of HELP:
  • Uniform License: It provides for a uniform licensing system to cover all hydrocarbons such as oil, gas, coal bed methane etc. under a single licensing framework, instead of the present system of issuing separate licenses for each kind of hydrocarbons.
  • Open Acreages: It gives the option to a hydrocarbon company to select the exploration blocks throughout the year without waiting for the formal bid round from the Government.
  • Revenue Sharing Model: Present fiscal system of production sharing contract (PSC) is replaced by an easy to administer “revenue sharing model”. The earlier contracts were based on the concept of profit sharing where profits are shared between Government and the contractor after recovery of cost.
  • Marketing and Pricing Freedom: It has been granted, subject to a ceiling price limit, for new gas production from Deepwater, Ultra Deepwater and High Pressure-High Temperature Areas.
Coal and Mining Sector

[pib] Coal Mine Surveillance & Management System (CMSMS) and ‘Khan Prahari’ AppPIB


Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Prelims Level: CMSMS, Khan Prahari

Mains Level: Steps taken by the government to curb the illegal mining of Coal and to improve its social implications


Union Minister of Coal, Railways, Finance & Corporate Affairs launched the Coal Mine Surveillance & Management System (CMSMS) and Mobile Application ‘Khan Prahari’.


  1. Illegal coal mining not only causes a loss to the nation’s resources but is also harmful to the environment.
  2. It is understood that coal is the main source of livelihood for many poor families residing in coal belts, but their sustenance should not be totally dependent on illegal coal mining.
  3. It is not only about saving national resources but also about improving the quality of life of those people.

Coal Mine Surveillance & Management System (CMSMS)

  1. The basic objective of CMSMS is reporting, monitoring and taking suitable action on unauthorised coal mining activities.
  2. It is a web based GIS application through which location of sites for unauthorised mining can be detected.

How does the app work?

  1. The basic platform used in the system is of Ministry of Electronics & Information Technology’s (MeiTY) map which provides village-level information.
  2. The leasehold boundary of all the coal mines is displayed on this map.
  3. The system will use satellite data to detect changes by which unauthorised mining activity extending beyond the allotted lease area can be detected and suitable action can be taken on it.
  4. The complaint originating from coal mines will go to Coal India Offices and those originating from coal blocks not allotted to Coal India will go straight to the State Government Officers
  5. And for each complaint the alert will also go to the District Magistrate and SP of the district.

‘Khan Prahari’ app

  1. Khan Prahari is a tool for reporting any activity taking place related to illegal coal mining like rat hole mining, pilferage etc.
  2. One can upload geo-tagged photographs of the incident along with textual information directly to the system.
  3. Hence, both satellite data and human information will be used to capture information on the unauthorised mining activities.
  4. Once reported, the information will be automatically directed to the nodal officers to take suitable action on those activities.
  5. The complainant can also track his complaint through the system. The identity of the complainant shall not be revealed. This app can easily be downloaded in Android and IOS.
  6. The uniqueness of the system is that it uses satellite data as well as public input to capture information on unauthorised coal mining activities and also take appropriate action on them with due transparency.

Other details of these systems

  1. The CMSMS will also provide other important information like reclamation work being done by Coal India Limited which is being monitored every year by CMPDI using satellite data.
  2. Status of Environmental Clearances /Forest Clearances etc. are also linked for information in this system.
Coal and Mining Sector

Government launches Sand Mining Framework


Mains Paper 2: Governance | Government policies & interventions for development in various sectors & issues arising out of their design & implementation

From UPSC perspective, the following things are important:

Prelims level: Sand Mining Framework

Mains level: Issues related to sand and mineral mining

Addressing the issue of sand mining

  1. The government has launched a framework to help states deal with the issue of sand mining, including demand-supply deficit and illegal extraction
  2. The Sand Mining Framework was launched at the third National Conclave on Mines & Minerals in New Delhi

Issues related to sand mining

  1. Environmental degradation
  2. Non-availability of sand
  3. High sand prices
  4. Illegalities in sand mining

Proposals in framework

  1. It includes suggestions for faster clearances /approvals and using its interventions in complete process chain of sand mining
  2. The framework also lays emphasis on the possible alternatives of sand, including its import
Coal and Mining Sector

Judgment on illegal mining: Three states concerned over ‘pandemic effects’ of SC order


Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level:  Mines and Minerals (Development and Regulation) Act, Environment Impact Assessment (EIA) notification, 1994 and 2006

Mains level: Illegal mining in India and ways to reduce it

SC ruling on illegal mining

  1. In the judgment passed by the Supreme Court on August 2, 2017, it was stated that the illegal miners who did mining without requisite green clearances would need to pay an amount equivalent to 100 percent of the value of the minerals extracted
  2. A penalty was imposed on 152 iron ore and manganese lessees in Odisha for illegal mining
  3. These mines were found to have conducted operations without forest and environment clearances between 2000 and 2011, sometimes even beyond the permitted area

Major provisions laid out in SC judgment

  1. Any mining activity carried on after January 7, 1998, without an FC (Forest Clearance) amounts to illegal or unlawful mining in terms of the provisions of Section 21(5) of Mines and Minerals (Development and Regulation) Act
  2. Any iron ore or manganese ore extracted contrary to Environment Impact Assessment (EIA) notification, 1994 or EIA, 2006, would constitute illegal or unlawful mining
  3. The SC added that all mining projects, which have a lease area of 5 hectares or more, are required to have an EC (environment clearance) with effect from September 14, 2006

Why is this a problem for states?

  1. The central government always takes its time in granting green clearances to the mining companies
  2. The mining lease owners, who did not receive their requisite green clearances on time, used to start their mining operations and then wait for the clearances
  3. But, by SC judgment they have to obtain green clearances first
  4. Many states have allocated mining blocks via auction but their green clearance is still pending


Environment Impact Assessment (EIA) notification, 2006

  1. The Union Ministry of Environment and Forest (MoEF) notified the new EIA Notification in September 2006
  2. Projects in Schedule-1 have been divided into two categories, Category A and B
  3. Category A project will require clearance from Central Government (MoEF). Category B will require clearance from State Government
  4. However, the state government will first classify if the B project falls under B1 or B2 category
  5. B1 projects will require preparation of EIA reports while remaining projects will be termed as B2 projects and will not require EIA report
  6. All Category A and Category B1 projects or activities have to undertake public consultation except for 6 activities for which public consultation has been exempted
  7. Some of the projects exempted include expansion of roads and highways, modernization of irrigation projects, etc
  8. The major difference in the New EIA Notification 2006 from the earlier one (1994) is its attempt to decentralise power to the State Government
Coal and Mining Sector

Centre unveils Internet portal for online tracking of mines

  1. News: The Ministry of Mines unveiled a web portal for the easy access to information regarding the mining sector in India, including a framework for rating mines
  2. Star ratings: The Ministry, through the Indian Bureau of Mines, has developed a template for the star rating of mines
  3. Web portal: Will have all the ratings of the mines and will also have information of the Sustainable Development Framework (SDF) for the mining sector
Coal and Mining Sector

Days of coal shortage over: Union Secretary

  1. News: The increase in the production of coal has led to 15% reduction in the imports
  2. The govt. has done necessary ground work for auctioning of coal mines for private commercial mining
  3. Future: Coal India is now looking forward to 1-billion-tonne production by 2019-20, with a projected demand of around 1,200 million tonnes
Coal and Mining Sector

Union Budget 2016-17: Coal cess doubled

  1. News: Finance Minister increased the cess on coal production from Rs 200 per tonne to Rs 400 per tonne
  2. The Clean Energy Cess would be renamed as Clean Environment Cess
  3. Background: In 2010, it was introduced as Rs 50 per tonne and this was the third time the cess was doubled
  4. Statistics: India produces coal about 600 million tonnes a year and imports about 150 million tonnes every year to meet its demand
  5. Impact: Along with domestically produced coal, the cess also applies to imported coal
Coal and Mining Sector

‘Uncover’ project of the Geological Survey of India

  1. Context: state-of-the-art project to be implemented in 2 selected areas in the country is focused on probing for deep seated/ concealed mineral deposits
  2. Relevance: This programme is also one of the important action points of the draft National Mineral Exploration Policy (NMEP)
  3. Main components:
  • Characterizing India’s geological cover
  • Investigating lithospheric architecture
  • Resolving 4D geodynamic and metallogenic evolution
  • Detecting and characterizing the distal footprints of ore deposits
Coal and Mining Sector

Coal linkages to steel, aluminium, cement sectors only via auction

Move for transparency & level-playing field; follows SC declaring allocation of 204 coal mines/blocks as illegal due to arbitrary procedure.

  1. This was decided by the Cabinet Committee on Economic Affairs (CCEA) which met under Prime Minister Modi
  2. The auction ensures all market participants have a fair chance to secure the coal linkage, irrespective of their size
  3. It attempts to ensure an optimal allocation of coal across user industries and geographies
  4. The cabinet allowed the railways ministry to form joint venture (JV) companies with the state governments
  5. To mobilize resources for undertaking various rail infrastructure projects in states
Coal and Mining Sector

Mines and Minerals (Development and Regulation) (Amendment) Bill, 2016

The new law will allow companies that received mining licences without having gone through the auction process to transfer these leases.

  1. The 2015 law allowed transfer of mines allotted through auctions but was silent on captive mining licences allotted in the past on the basis of recommendations by a screening committee.
  2. It will make M&As easier in the steel cement, and metals sectors.
  3. It gives acquirers raw material security and scope for its optimal use in end-use plants in the cement, steel and aluminium sectors.
  4. It will also help banks liquidate such licences if they have been mortgaged to it..
Coal and Mining Sector

Govt to amend mining law

The govt will amend the mining law in order to facilitate transfer of mines allotted for captive use to end-user industries.

  1. It seeks to unlock thousands of crore worth of investments stuck in debt-laden minerals and commodities sector.
  2. It will also allow mergers and acquisitions of companies and facilitate ease of doing business for companies.
  3. Thid will improve profitability and decrease costs of the companies dependent on supply of mineral ore from captive leases.
Coal and Mining Sector

Govt. to amend ‘deal-breaker’ mining law in Budget session

The govt is planning to amend a law which is holding up mergers and acquisitions in the distressed commodities and mining sector.

  1. The current law is holding up mergers and acquisitions worth thousands of crore.
  2. The deals are stuck in a no-go zone due to the Mines and Minerals (Development and Regulation) Act of 2015.
  3. The act doesn’t allow transfer of captive mines allotted to end-user plants in the past.
  4. Govt. will amend this act because there is no alternative method to allow such acquisitions of captive mineral assets in the present law.

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