i) The allocation is made to meet the coal requirement of the permitted end use project. The block may be allotted to an End User Company, JV or a Mining Company which has firm back-to back tie up with specified End User Company (ies). The Mining Company should have a legally binding and enforceable supply contract/ agreement for the life of the mine. The coal produced from the block shall not replace any coal linkage given to the applicant by the Coal India Limited/its subsidiary companies and/or by the Singareni Ministry.
ii) The block is meant for captive use in their own specified end use projects or that of associates/end use company (ies) in case of a mining company.
iii) In case it is required to beneficiate the inferior grade coal the middling generated shall be used for power generation in their own power plant i.e. the useable middings/rejects generated during beneficiation shall be used captively by the allocattee. The modalities of disposal of surplus coal/ middlings/ rejects if any, would be as per the prevailing policy/ instructions of the Government at the relevant point in time and could also include handing over such surplus coal/ middlings/rejects to the local CIL subsidiary or to any person designated by it at a transfer price to be determined by the Government.
iv) The coal production from the captive blocks shall commence within 36 months(42 months in case the area is in forest land ) of the date of allocation in OC mine and in 48 months(54 months in case the area fall under forest land ) from the date of allocation in UG mine. The end use project schedule and the coal mine development schedule should be modified accordingly and submitted to this Ministry within 3 months from the date of allocation.
v) The Company shall buy the Geological report (in respect of fully explored blocks) from CMPDIL within six weeks of the date of allocation.
vi) In respect of an unexplored block, the allocattee company shall apply for a prospecting license within three months of the date of issue of shall be completed and geological report prepared within two years from the date of issue of prospecting license.
vii) The company shall submit a bank guarantee equal to one year’s royalty amount based on mine capacity as assessed by CMPDIL, and the weighted average approval of the mining plan the Bank Guarantee amount will be modified based on the final peak/rated capacities of the mine.
viii) The company shall submit a mining plan for approval by the competent authority under the Central Government within six months (in respect of explored blocks) from the date of this letter.
ix) In respect of an unexplored block, the mining plan shall be submitted for approval by the competent authority within two years and six months from the date of issue of the letter of allocation.
x) 50% of the bank guarantee shall be linked to the milestones ( time schedule) set for development of captive block, and the remaining 50% to the guaranteed production. The bank guarantee shall be liable to the encashed in the following eventuality:
i) There shall be an annual review of progress achieved by an allocattee company. In the event of lapses, if any, in the achievements vis-a-vis the milestones set for that year, a proportionate amount shall be encashed and deducted from the bank guarantee.
ii) Once production commences, in case of any lag in the production of coal/lignite, a percentage of the bank guarantee amount will be deducted for the year. This percentage will be equal to the percentage of deficit in production for the year with respect to the rated/peak capacity of the mine, e.g., if rated/ peak capacity is 100, production as per the approved mining plan for the relevant year is 50 and actual production is 35, then ( 50-35)/100 x100 =15% will lead to deduction of 15% of the original bank guarantee amount for the year. Upon exhaustion of the bank guarantee amount, the block shall be liable for de-allocation/cancellation of mining lease.
iii) The allocattee shall ensure that the bank guarantee remains valid at all times till the mine reaches its rated capacity or till the bank guarantee is exhausted. Any lapses on this count shall lead to de-allocation/ cancellation of mining lease.
xi) No coal shall be sold, delivered, transferred or disposed of except for the stated captive mining purposes except with the previous approval of the Central Government.
xii) Mining of coal from the allocated captive coal block shall be carried out in accordance with the applicable Statutes/Rules/Orders/Directions governing the mining of coal in the country.
xiii) Those of the above conditions relevant at the time of grant of mining lease shall be included as additional conditions in the mining lease in addition to any further conditions imposed by or agreed to by the Central Govt.
xiv) The State Government at the time of seeking previous approval for the grant of mining lease shall submit a draft of the mining lease containing the above relevant conditions for vetting by the Central Govt. The final mining lease shall be as vetted/modified by the Central Govt. Any deviation from the vetted/modified draft shall render the mining lease deed ab-initio null and void and without effect.
xv) Allocation / mining lease of the coal block may be cancelled, inter-alia, on the following grounds: (a) Unsatisfactory progress of implementation of their end use sponge iron plant / power plant. (b) Unsatisfactory progress in the development of coal mining project. (c) For breach of any of the conditions of allocation mentioned at (i) to (xi) above. The De-allocation/cancellation of mining lease shall be without any liability to the Government or its agencies, whatsoever. Any expenses incurred by the allocatee or any right or liability arising on the allocatee out of the measures taken by him shall solely be to his account and in no way be transferred to or borne by the Government or its agencies.
xvi) The company may approach CMPDIL for the geological report and contact the State Government authorities concerned for the necessary permissions/clearances etc. for attaining mining rights and related matters. The arrangement of transport of coal will have to be worked out by the company.
xvii) In case of coal blocks acquired under the CBA Act, the mineral rights shall be surrendered by the Government Company to the State Government. On payment of necessary compensation/ considerations by the allocatee company to the Government Company, the land shall be transferred to them and the State Government shall grant a mining lease over the area in favour of the allocatee company under the provisions of and as per the procedure prescribed under the MM(D&R) Act and MC Rules. Any delay beyond 2 months by Government Company in transferring the title /possession of land, as the case may be, can be claimed as grace period by the allocatee for the purposes of conditions (iv) &(vii) above