A. GUIDELINES

1.Applications for allocation of coal blocks for captive mining for the specified end uses shall be made to the Director (CA-I) in the Ministry of Coal in five copies. The application shall be accompanied by the following in addition to any other relevant documentation that the applicant may submit:

  • Certificate of registration showing that the applicant is a company registered under Section 3 of the Indian Companies Act. This document should be duly signed and stamped by the Company Secretary of the Company. (1 copy).
  • Document showing the person/s who has/have been authorised to sign on behalf of the applicant company while dealing with any or all matters connected with allocation of the sought coal block/s for captive mining with the Government/its agencies. This document should be duly signed and stamped by the Company Secretary of the Company. (5 copies)
  • Certified copy of the Memorandum and Articles of Association of the applicant Company.
  • Audited Annual Accounts/reports of last 3 years. (5 copies)
  • Project report in respect of the end use plant. If the report is appraised by a lender, the appraised report shall also be submitted. (5 copies)
  • Detailed Schedule of implementation (milestones and time-line for each milestone) for the proposed end use project and the proposed coal mining development project in the form of bar charts (5 copies). However, the overall timeframe proposed should not exceed the normative time ceiling prescribed.
  • Detailed schedule of exploration (milestones and time-line for each milestone) in respect of unexplored blocks. However, the overall timeframe proposed should not exceed the normative time ceiling prescribed.
  • Scheme for disposal of unuseables containing carbon obtained during mining of coal or at any stage thereafter including washing. This scheme must include the disposal/use to which the middlings, tailings, fines, rejects, etc. from the washery are proposed to be put. (5 copies)
  • Demand draft for Rs.10,000/- in favour of PAO, Ministry of Coal payable at New Delhi.
  • A Soft Copy of details, as filled in the Application Form, is also to be furnished in the specified Database Form(in MS-Excel format) in a CD along with the Application.

Applications without the above accompaniments would be treated as incomplete and shall be rejected.

2. In respect of fully explored blocks, geological data may be obtained from CMPDIL, NLC or the State agency concerned, as the case may be, on nominal charges. However, full cost of exploration and geological reports would be reimbursed to the agency concerned within six (6) weeks of date of issue of allotment letter.

3. Where only regionally explored blocks are offered for allocation, the detailed exploration/prospecting in the said blocks shall be done by the allocattee company under the supervision of CMPDIL.

4. Replacement of linkage with coal to be produced from the allocated captive coal block can be permitted by the Screening Committee subject to safeguarding the interest of CIL and its subsidiaries.

5. Disposal of production during the development phase of the captive mine to the local CIL Subsidiaries has been allowed at a price to be determined by the Government.

6. In order to promote scientific and proper mining the larger blocks shall not be sub blocked into smaller ones. Only natural sub-blocks will be formed.

7. Allotment of Captive blocks to consortium of group of companies

(i) If requirement of coal by an applicant does not match with the reserves in a natural block then clubbing of requirements may be resorted to and in case a number of applicant companies form a consortium for utilisation of a block for their captive use, the same may be considered for allocation under a legally tenable arrangement.

(ii) More than one eligible and deserving companies will be allowed to do captive mining of coal by forming a joint venture coal mining company. The constituent applicant companies would hold equity in the joint venture company in proportion to their assessed requirement of coal and the coal produced would be exclusively consumed in their respective end use projects. Distribution of coal would be in proportion to their respective assessed requirements.

(iii) One or more companies (to be called leader companies) from amongst the selected, could be allowed to do mining of coal in one or more captive blocks and the other companies (to be called associate companies) would get coal from the captive block in proportion to their assessed requirements. The local Coal India subsidiary could facilitate this arrangement by taking a nominal service charge. Leader companies will deliver coal to associate companies at a transfer prices to be determined by the Central Government. 8.

Mining of Coal by allottee companies

The following dispensations are permitted for mining of coal from captive blocks:

(i) Any of the companies engaged in approved end-uses can itself mine coal from a captive coal block; or

(ii) A company engaged in any of the approved end-uses can mine coal from a captive block through a mining company supplying the coal on an exclusive basis from the captive coal block to the end-user company or to its subsidiary company, provided the end-user company has firm tie up with mining company for supply of coal, supported by legally binding and enforceable contract / agreement.

(iii) An independent coal/lignite mining company can also be allocated a captive block on the condition that the entire coal/lignite so mined would be transferred to an end user company(ies) for their captive consumption in the specified end uses;

Provided that the said mining company has firm back-to-back tie up with the specified end user company(ies), supported by legally binding and enforceable supply contract/agreement.

9. Inter-se priority for allocation of a block among competing applicants for a captive block may be decided as per the following guidelines:

 Status (stage) level of progress and state of preparedness of the projects;
- Networth of the applicant company (or in the case of a new SP/JV, the networth of their principals);
- Production capacity as proposed in the application;
- Maximum recoverable reserve as proposed in the application;
- Date of commissioning of captive mine as proposed in the application;
- Date of completion of detailed exploration (in respect of unexplored blocks only) as proposed in the application;
- Technical experience (in terms of existing capacities in coal/lignite mining and specified end use);
- Recommendation of the Administrative Ministry concerned;
- Recommendation of the State Government concerned (i.e. where the captive block is located);
- Track record and financial strength of the company

Preference will be accorded to the power and the steel sectors. Within the power sector also, priority shall be accorded to projects with more than 500MW capacity. Similarly, in steel sector, priority shall be given to steel plants with more than 1 million tonne per annum capacity.
B.

CONDITIONS OF ALLOTMENT

10. Upon allocation of captive coal block by the Screening Committee the applicant would submit an affidavit in the prescribed format to the effect that all coal mined from the captive block shall exclusively be used in the proposed end use project for which the said block has been allocated and that in case of any slippage in implementation of the end use project or the captive coal mine development project, as per the schedule of implementation/bar charts submitted and agreed to by the Ministry of Coal, the said block shall be deallocated  without any liability to the Government /its agencies, whatsoever.

11. The normative time limit ceilings have been provided to ensure that 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 issue of letter of allocation in OC mine and in 48 months (54 months in case the area fall under forest land) from the date of said letter in UG mines.
12. In respect of an unexplored block, the allocattee company shall apply for a prospecting license within three months of the date of issue of allotment. The exploration shall be completed and geological report prepared within two years from the date of issue of prospecting license.

13. Any slippage in meeting with the above time limits, unless previously agreed to by the Screening Committee, for special reasons to recorded in writing, may lead to forfeiture of bank guarantee, or/and cancellation of allocation, previous approval under Section 5(1) of the MMDR Act, 1957 or mining lease, as the case may be.

14. The allocattee company shall be required to submit a bank guarantee equal to one year’s royalty amount based on mine capacity as assessed by CMPDIL or NLC, as the case may be, and the weighted average royalty within 3 months of the date of letter of allotment. Subsequently, upon approval of the mining plan the Bank Guarantee amount will be modified based on the final peak/rated capacities of the mine.

15. 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 be 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)/100x100= 15% will lead to deduction of 15% of the original bank guarantee amount for that 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.

16. The Company shall obtain the geological report (in respect of fully explored blocks), on payment of requisite charges, from CMPDIL, NLC or the State Government agency concerned, as the case may be, within six weeks of the date of issue of allotment letter.
17. In respect of a fully explored block, the company shall submit a mining plan for approval by the competent authority under the Central Government within six months from the date of issue of the letter of allocation.
18. 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.
19. Mine opening permission shall be considered only after financial closure for the proposed end use project is achieved.
20. In case a captive block is offered/allocated for washing-cum-end-use all the beneficiated coal from the washery would exclusively be used in the proposed end use project of the allocatee company as approved by the Central Government and not for commercial use or otherwise.  All middlings, tailings, or rejects from the washery, as the case may be, and all unusables containing carbon obtained during the mining of coal or in any process thereafter, if any, shall be used for captive consumption only by the allocattee in his proposed end use project or as per the scheme for disposal submitted by the applicant and agreed to by the Screening Committee.  In the event that disposal is allowed by the Government, 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.