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Supreme Court declares captive mining licences illegal

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World Coal,

The Indian Supreme Court has ruled that the process used to hand out coal mining licences to private companies is illegal, causing fresh uncertainty for an industry already under pressure.

Coal blocks have been allocated to power, steel and cement companies for captive mining since 1993 to help relieve the chronic coal supply shortages from Coal India (CIL) – the state-owned coal mining monopoly. Yet the process by which this was done – often involving no payment to the state for the licence – has been embroiled in scandal since a 2012 report from the Comptroller and Auditor General (CAG) of India alleged serious corruption and mismanagement of the process, costing the Indian government billions of dollars in lost revenue.

Between 1993 and 2011, the government gave away 218 coal licences. 80 of these have since been cancelled due to slow development of the resources. The Supreme Court ruling now throws the remaining licences into doubt. A further hearing next week will assess the future of the allocated mines.

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