Commercial mining is the process of mining minerals for commercial use without any end-use restrictions. It involves the participation of private companies in the mining sector. In this essay, we will discuss the need for commercial mining, its features, benefits, and the government’s policy for commercial oil and gas mining.

The Need for Commercial Mining:

India has the 4th largest coal reserves in the world, but it still imports a significant amount of coal. Coal India Ltd, a state-owned enterprise, is unable to meet the increasing demand for coal, leading to a supply-demand gap. According to NITI Aayog, the demand for coal is expected to increase between 1.3-1.5 billion tonnes by 2030. Hence, commercial mining is essential to bridge the gap between demand and supply.

Features of Commercial Mining:

  1. Competitive Bidding: The government invites bids from private companies for coal blocks through competitive bidding. The process allows companies to bid for a coal block based on the price they are willing to pay for it.
  2. Revenue Sharing Model: Coal blocks are allocated based on the revenue-sharing model. This model differs from the production sharing model, where the profit is shared with the government. In the revenue-sharing model, a portion of revenue from the sale of the produced mineral is shared with the government.
  3. No Captive End-Use Criteria: The previous coal block allocation system mandated companies to use the coal only for a specific purpose. The new system does away with the captive end-use criteria, allowing companies to use the coal for any purpose.
  4. Rolling Auction: To fasten the auction process, the government introduced the rolling auction mechanism. This mechanism allows auctions to take place throughout the year.
  5. Single Window Clearance: To speed up the process of operationalization of coal mines, the government introduced a single-window clearance mechanism.

Benefits of Commercial Mining:

  1. Increased Competition: The participation of private companies in the mining sector results in increased competition. This competition leads to better revenues for the government and increased efficiency in the supply of coal.
  2. Increased Private Participation: The participation of private companies results in increased investment in the mining sector, which leads to increased supply of coal. It also leads to the creation of more jobs, which results in economic growth.
  3. 100% FDI Allowed: The government allows 100% FDI in the mining sector, which results in increased FDI inflow to the sector.

Commercial Oil and Gas Mining:

In 2016, the government introduced the Hydrocarbon Exploration and Licensing Policy (HELP) to replace the New Exploration Licensing Policy (NELP) for oil and gas exploration and mining. The policy aims to provide a level playing field for the private sector in the oil and gas sector. It provides for revenue sharing and allows companies to explore and produce oil and gas in unexplored areas.

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