Two India Billionaires Win in Landmark Government Coal Auctions
A front loader moves coal in Jharkhand, India. (Photographer Prashanth Vishwanathan/Bloomberg)

Two India Billionaires Win in Landmark Government Coal Auctions

Metal producers Vedanta Ltd. and Hindalco Industries Ltd., India’s leading producers of aluminum and copper, were among top bidders on the first day of Indian coal mine auctions for private companies, spelling the end of decades of government control.

Billionaire Anil Agarwal’s Vedanta offered to share 21% of its revenue from the Radhikapur West mine in eastern Odisha state, while billionaire Kumar Mangalam Birla’s Hindalco bid 14.25% revenue share, the highest, for the Chakla mine in neighboring Jharkhand province, the coal ministry said in a statement. Winners will be allowed to mine and sell coal from their blocks, so far a preserve of state companies.

Two India Billionaires Win in Landmark Government Coal Auctions

The auctions have been touted by Prime Minister Narendra Modi’s government as a flagship reform and have been showcased among measures to revive the economy from the shock of the pandemic. India sees coal as a domestically available, affordable source of energy and a significant part of its energy mix even as it promotes renewable energy in a bid to meet its climate goals.

Yet, the timing of the auction couldn’t be more stark. The country is pushing for expansion of the dirtiest fossil fuel as a deadly winter smog, partly caused by coal burning, envelops its northern plains.

Two India Billionaires Win in Landmark Government Coal Auctions

Coal-fired electricity generation plunged 13% from a year earlier in the first half of the fiscal year that started in April. The share of the fuel in power generation narrowed to 64% during the period, from 67% a year earlier. While its share gradually declines, the fuel is expected to dominate the country’s energy mix for several years to come.

Radhikapur West mine, sought by Vedanta, has a reserve of 312 million tons, while the Chakla mine that Hindalco is set to win holds 76 million tons of coal, the ministry said. Other top bidders on the day were Aurobindo Realty & Infrastructure Pvt., JMS Mining Pvt. and Yazdani International Pvt. Auctions for other mines will continue until Nov. 9.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.