KPMG has estimated the contract coal mining sector to grow fourfold to Rs 60,000 crore by 2030 after it touches Rs 36,000 crore by 2025.
"The flavour of the season, going forward, is commercial coal mining; however, there is limited attention to the contractors in the coal mining market who shoulder disproportionate volume of activities on the ground. This segment has grown by leaps and bounds over the last two decades. Today, a major part of the composite production of coal and overburden is through outsourced means delivered by various coal mining contractors. However, the understanding of this business is very sketchy, both at the end of mine owners as well as interested new entrants,” mentioned a report on Contractors in The Coal Mining Market released by KPMG.
According to the report, the total number of large players in this segment, at present, is around 10-15. The sector has shown a lot of innovation and enterprise over the years and has offered a range of solutions to mine owners accommodating divergent business requirements.
However, funding in the coal sector has been difficult to come by on account of the uncertainty around the future of coal as well as the difficulty in navigating the land, resettlement and rehabilitation and regulations in India.
Bhattacharjee said: “Under such a scenario, it is only natural that mine owners will tend to share the developmental market risk with mine operators. Therefore, it is imperative to understand the key levers through which this objective of risk-sharing can be most efficiently managed and the consequences of not doing it properly. Some of the key contractual levers related to risk sharing are the sharing of Capex burden, working capital management through mine operators and penalties for various types of slippages with respect to guarantees given to the government.“
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