Foreign Companies Likely To Skip Commercial Coal Block Auctions

Commercial coal block auctions are likely to receive a lukewarm response from foreign players as big companies are losing interest in a sector that has been widely seen as polluting and avoided by top banks and financial investors, as per a report in the Economic Times. 

The Centre is in the process of inviting global players for commercial mining, following 100% foreign direct investment in the sector.

Mining major Rio Tinto sold off its last coal assets in Queensland, Australia in 2018, while BHP recently said it would exit coal if presented with opportunities. The company operates mines in Australia and Colombia.

Anglo American, a large British mining company, has decided to reduce coal production over the next two years. Australia’s largest miner Glencore said in a statement that it aims to limit coal output capacity broadly to current levels. Murray Energy Corporation (MEC), America’s largest underground coal mining company, has filed for bankruptcy. Partha Bhattacharyya, former chairman, Coal India, said large miners are facing pressure to quit coal and be more environment-friendly.

The decline in the storage cost of renewable energy puts a cloud on the future of thermal coal, prompting a lack of disinvestments in the coal sector in the future.

By the end of 2019, some 112 global financial institutions holding more than $10 billion worth of assets under management had already exited coal. Global insurers divested roughly $8.9 trillion of coal-based investments. Most of them now refuse to insure new coal mines and power plants.