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Captive and Non Captive Mines

2021 OCT 6

Preliminary   > Economic Development   >   Indian Economy and Issues   >   Energy

Why in news?

  • Coal mines that produce coal solely for their own use, known as ‘captive mines’ will now be allowed to sell 50% of their annual output in the open market.

More about the news:

  • The Ministry of Coal has amended Mineral Concession Rules, 1960 with a view to allowing sale of coal or lignite, on payment of additional amount, by the lessee of a captive mine up to 50 percent of the total coal or lignite produced in a financial year, after meeting the requirement of the end use plant linked with the mine.
  • Earlier this year, the Mines and Minerals (Development & Regulation) Amendment Act had been amended to this effect.
  • This is applicable for both the private and public sector captive mines.

Why such an amendment?

  • With this amendment, the Government has paved the way for releasing of additional coal in the market by greater utilization of mining capacities of captive coal and lignite blocks, which were being only partly utilized owing to limited production of coal for meeting their captive needs.
  • Availability of additional coal will ease pressure on power plants and will alsoaid in import-substitution of coal.
  • The allowance for sale prescribed quantity of coal or lignite shall also motivate the lessees to enhance the production from the captive mines.
  • Further, payment of additional premium amount, royalty and other statutory payments in respect of the quantity of coal or lignite sold shall boost the revenue of the State Governments

Difference between Captive and Non Captive Mines:

  • Captive Mines:
    • Captive mines are the mines that are owned by companies. The coal or mineral produced from these mines is for the exclusive use of the owner company of the mines. The company cannot sell coal or mineral outside. Some electricity generation companies used to have captive mines.
  • Non- Captive Mines:
    • Non-captive Mines are mines from which the produced coals of minerals could be used for its own consumption and as well as for selling it.
  • Mines and Minerals (Development and Regulation) Act, 1957 empowered central to reserve any mine for the particular end-use. These are known as captive mines.
  • Now, the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 removed the distinction. Now captive mines will also be able to sell their stock.

PRACTICE QUESTION:

Consider the following statements:

1.The coal sector was nationalized by the Government of India under Indira Gandhi.

2. Captive coal mines will now be allowed to sell 50% of their annual output in the open market

3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 only

(d) 1, 2 and 3

Answer

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