India Just Opened Its Coal Sector To The World, But Is That A Good Thing?

Can coal be India's savior?

That's what the government is hoping for with its latest move Wednesday when it allowed 100% foreign investment in mining of coal in an effort to give a boost to a flailing economy.

Till now, foreign investment was only allowed in coal mines allotted for captive use, meaning for use by the companies themselves. But now with economic growth slowing to 5.8% in the quarter ended on March 31 and a similar figure expected for the following quarter (data for which was not available at the time of publication), New Delhi is trying to attract foreign investment to get economic growth back on track.

Mining magnate Anil Agarwal, who owns London-headquartered Vedanta Resources, reportedly said his company will "definitely be interested. Let’s see how fast the government come with the tender and whatever they have in mind."

But not everyone is convinced the move will do much to benefit the coal industry or the wider economy.

Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis, says he "expects foreign corporate responses to be muted, at best."

One reason is that historically the government has favored the state-run Coal India for mines where it was easier, and cheaper, to access the coal, while the private sector was invited to bid for deposits that were generally in harder to access sites or with geological or land acquisition impediments, says Buckley

Source: Forbes
Date: Aug 31, 2019