Bloomberg News

India Said to Lift Curbs on Coal Mining in Dense Forests

September 21, 2011

(Updates with closing share prices in fifth and sixth paragraphs.)

Sept. 21 (Bloomberg) -- A group of Indian ministers agreed to allow companies to seek approval to mine coal in some dense forest areas, overturning an environment ministry ban, according to two government officials.

The ministers decided that applications could be considered on a case-by-case basis, the officials said, asking not to be identified because the matter is private. The decision will benefit companies including Coal India Ltd., the world’s largest producer of the commodity, Essar Power Ltd. and Hindalco Industries Ltd.

The environment ministry halted mining in dense forests in 2009 to preserve tree cover and wildlife. The coal ministry wants more areas opened for mining coal, which is used to fire more than half of the power generation capacity in Asia’s second-fastest growing major economy.

India’s cabinet referred the issue of coal mining in forests to the government panel in January.

Hindalco declined 2.9 percent to 145.65 rupees at the 3:30 p.m. close in Mumbai. The company is awaiting approval to mine its Mahan block in Madhya Pradesh state for coal to produce electricity for a planned 359,000 metric ton aluminum smelter. India’s biggest aluminum maker formed a venture with Essar Power to develop the Mahan coal mine.

Coal India rose as much as 2.4 percent to 387.45 rupees, its biggest gain since Sept. 7, and closed at 384.45 rupees.

India’s coal production has trailed demand from utilities, steel mills and cement makers. Domestic coal output in the year ending March 31 is estimated at 559 million tons, falling short of demand by 137 million tons, Coal Minister Sriprakash Jaiswal said in parliament on Sept. 5.

Coal India cut its output target for the year ending March 2017 by 16 percent to 556.4 million metric tons because of delays in environmental approvals and land acquisition, Jaiswal said at the time.

--With assistance from Rakteem Katakey in New Delhi. Editors: John Chacko, Abhay Singh

To contact the reporters on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net; Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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