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NEWS - THIS MONTH IN COAL MAY 2017 • E&MJ; 29 www.e-mj.com ter cyclone Debbie knocked out supplies from the world's top coking coal region in Australia's state of Queensland, forcing Chinese steel makers to buy even more US cargoes. India to Offer Complete Pricing Freedom to Private Coal Miners India's Ministry of Coal has decided to of- fer pricing freedom and revenue sharing contracts as sweeteners to woo private investors into commercial coal mining in the country. Having thrown open the coal sector to private investors for commer- cial mining for the first time since 1973 when coal industry was nationalized, In- dia would offer total reserves of around 30 million metric tons (mt) in the first tranche to be allocated to such private miners through the reverse auction route. A ministry note on the launch of pri- vate, commercial mining currently put out for circulation among all stakeholders said that all successful bidders at the re- verse auction would have full freedom to price their production and no restrictions on merchant sale of coal in the open mar- ket. At present, private coal mining was permitted only for captive consumption and even excess production was not per- mitted for merchant sale. A private investor would have to sign up for a revenue sharing contract after a successful reverse auction. The contract for revenue sharing proposes that the government' share of revenue would be calculated on basis of actual revenue or actual production multiplied by 1.2 times of the Coal India Ltd (CIL) run-of-mine price for average grade of coal, whichever was higher. Laying out the eligibility parameters of prospective bidders, the working paper said that each bidder should have a min- imum net worth of $230 million and ex- perience of excavating at least 25 million m 3 per year. At the same time, the government proposed to lay down on production quantities. The private miner would have freedom to optimize production up to the maximum laid out in the sanctioned min- ing plan. But, in the case of adverse eco- nomic conditions, the miner would not be able to reduce production from the mine to less than half of the maximum sanc- tioned in the mining plan. The successful bidder would be re- quired to make an upfront payment of 10% of the annual turnover value of coal in three installments, 50% on exe- cution of the mining plan, 25% on exe- cution of mining license and the balance on grant of mine opening permission from the government. Some private miners, however, ex- pressed reservations on the revenue sharing formula. According to one private mine developer who spoke on condition of anonymity as his company proposed to participate in the auction, several min- ing companies were expected to submit their concerns over revenue sharing to the government. It should be noted that adhering to a revenue sharing based on a fixed formu- la would be impractical, since geological parameters of the coal blocks were un- known and margins from merchant sale of coal would differ from block to block as cost of production varied depending on difficulty of mining in respective blocks, the private miner said.