Indian miners reject plan to link national coal index to foreign prices – by Sudarshan Varadhan (Reuters U.S. – October 10, 2019)

NEW DELHI (Reuters) – India’s miners are rejecting a government proposal to establish a national coal index that would be linked to international prices, documents reviewed by Reuters show, because it could make domestic supply uncompetitive.

India’s government is creating a coal price index as part of its plans to open the coal sector to outside investment and end state-run Coal India’s control over prices. The country plans to invite bids from global firms for coal mining blocks by the end of 2019.

A government panel has proposed one index that would link directly to foreign indexes, such as in Indonesia and Australia and a second proposal that measures the value and volume of all coal transactions, including imports, and compares them to a base period, government documents reviewed by Reuters showed.

Local coal prices would likely rise as a result of either proposed index, reducing the competitiveness of local supply, which typically has a lower heat content, to imports.

The Federation of Indian Mineral Industries (FIMI), which counts Rio Tinto’s India unit and India’s Adani Enterprises among members, objected to both plans in a Aug. 23 letter to the Ministry of Coal that was reviewed by Reuters.

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