The central government has used the Covid-19 situation to announce reforms aimed at bringing more private capital into the mining sector. While the reforms were largely welcomed by the industry, the timing of the announcement, its inclusion as part of the relief measures and its effectiveness in the near term are being questioned.

Most of the announcements related to the sector were largely a reiteration of the decisions taken by the government in the past few years. But there were a few novelties as well. However, there is no clarity on when the announcements would be implemented.

“The one thing that stands out is the joint auction of coal and bauxite blocks. There are largely three primary aluminium players in India that need both coal and bauxite and each have their raw material already tied up in varying degrees.

“Additionally, the commercial coal block auction rule is likely to stipulate minimum two bidders and bauxite needs minimum three bidders in the first attempt under the current law. One needs to see which blocks are set up for auction this way and what are the rules and valuations. Also, players need a good view of demand to find the confidence to expand,” said Niladri Bhattacharjee, partner — metals and mining, KPMG in India.

For the industry the reforms were mostly in the pipeline and the government in a bid to push self-reliance has taken the opportunity to announce the changes.

“While these are not Covid-19 related, it would be good for the sector in the long term. These moves were in the pipeline for a long time. Coal India also needs to have some competition,” said V.K. Arora, chief mentor, KCT.

“Single stage, seamless auction of the exploration-cum mining-cum-production regime shall attract large investments and encourage private participation in the mining sector, thereby boosting mineral production in the country,” said Rahul Sharma, vice-president of the Aluminium Association of India.

But a former mining sector executive said that in the present context of a global economic slowdown, mining companies worldwide would primarily remain on a wait-and- watch mode as their own finances are constrained. Even the priority of the domestic players would be to normalise operations ahead of participating in auctions.

“The focus at present should have been on how to enable the companies to mitigate the challenges of Covid-19. Instead the government seems to be prioritising reforms, the results of which may not have immediate impact,” he said.