“Illegal” ruling on coal licences in India potential headwind to growth

NEW DELHI – A Supreme Court decision to rule as ‘illegal’ about 200 coal mining licenses awarded in India since 1993 to corporates for captive use is creating uncertainty as to how these mines will be dealt with, particularly given that India has already been facing coal shortages, according to a research report by ANZ Bank. The Supreme Court is expected to announce a final verdict next Monday, September l.

“Depending on the final verdict, this decision creates some potential headwind to growth in India in the near term,” ANZ says. “From a longer term perspective, some in the industry are reportedly seeing this as a positive to the extent that it has ended  uncertainty for an issue long anticipated as troublesome -and should pave the way for a sustainable clean-up of the allocation process once and for all.”
ANZ says many coal licence owners had kept their mining investments and related investments (steel/cement/power) on hold pending the outcome of  ongoing court investigations. 
Of the about 200 mining licences declared illegal, ANZ understands that around 30 are operational while the rest are unmined.  These operational mines account for about 9% of India’s total coal production. www.live.anz.com (ATI).