Coal Mines (Nationalisation) Act 1973

Context:

The counsel for the Competition Commission of India (CCI) recently said in the Supreme Court that the Coal Mines (Nationalisation) Act, 1973, does not protect Coal India Ltd (CIL) from the competition laws.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. Main Features of Coal Mines (Nationalisation) Act, 1973:
2. What are Captive Mines?

Main Features of Coal Mines (Nationalisation) Act, 1973:

• Enacted by the Indian Parliament to acquire and transfer the right, title, and interest of owners in respect of coal mines specified in the Schedule.
• The Schedule contained a list of about 711 coal mines located in different parts of the country.
• The objective of the Act is to ensure rational, coordinated, and scientific development and utilization of coal resources consistent with the growing requirements of the country.
• Under the Act, coal mining is exclusively reserved for the public sector.

Exceptions to the Policy:

• An amendment to the Act in 1976 introduced two exceptions to the policy of exclusive public sector coal mining:
  • Captive mining by private companies engaged in the production of iron and steel
  • Sub-lease for coal mining to private parties in isolated small pockets not amenable to economic development and not requiring rail transport
• The Act was amended in 1993 to allow private sector participation in captive coal mining for various end-uses, including generation of power, washing of coal, and production of iron and steel.

Allotment of Coal Mines:

• Under the Act, the allotment of coal mines for captive use is based on the recommendation of a high-powered committee chaired by the Secretary, Ministry of Coal.
• The mining of coal for captive use for the production of cement is also permitted by the Government notification.

What are Captive Mines?

• Captive mines are mines that are set up for the exclusive use of the company or organization that owns them.
• The minerals or resources extracted from these mines are not sold on the open market but are instead used internally for the company’s own operations.
  • For example, a steel company may have its own captive iron ore mine to ensure a reliable supply of the raw material for its production process.
  • Similarly, a power generation company may set up its own captive coal mine to ensure a steady supply of fuel for its power plants.

-Source: The Hindu