• The ordinance removing end user specification in the auction of coal blocks is effectively allowing for full-fledged commercial coal mining. News reports (Bloomberg) have quoted the Coal Secretary as saying that 40 coal blocks would be put up for auction.
• Any entry of commercial coal miners is NOT negative for COAL as: a) any coal production from auctioned coal blocks would be at least three years away after the auction of the block; b) new miners would not have a lower cost of production as it would have to bid for the coal blocks and hence there would be a revenue share; and c) the eventual sale of coal in an open market would allow for better price discovery for Coal India as well.
• We would highlight that the dividend is now a few weeks away (FY20 dividend should be declared at some point in February).
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
Found this insight useful?
Please share with your friends and family as well. You can also subscribe to one of our channels listed at the bottom of this page.