Coal block auction: Companies see benefits in long term

The bigger pluses for metal companies which have won leases for coal blocks in the ongoing auction are long-term in nature, say analysts. Compared to the cost of import, the current bid prices are still lower. The price in international markets is in any case much lower from the peak of a few years earlier and, hence, companies would benefit when prices revive. This is apart from raw material security.

So far, Hindalco Industries, flagship company of Aditya Birla Group, has won two small mines, Kathautia in Jharkhand and Gare Palma IV-5 in Chhattisgarh. Vedanta Group company Bharat Aluminium (Balco) has won the Chotia mine in Korba, the area from where it had also earlier sourced coal, from the Gevra & Kusmunda mines of South Eastern Coalfields.

Though Hindalco is paying a high price for captive coal in the auctions, almost close to landed cost via the e-auction route, the landed cost from the mine allotted will still be at a 30-35 per cent discount from imported coal.

For Balco, the Chotia mine in the Korba region has not changed much for the company in terms of coal pricing.

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