India’s Government May Relax Mine Equipment Procurement Rules

PwC’s The Indian government is considering changing its procurement rules to provide better flexibility for domestic miners to shop abroad for high-end mining equipment, including longwall technology.

According to a senior government official, Indian producers such as Coal India Ltd. (CIL) and Singareni Collieries Co. Ltd. (SCCL) are interested in obtaining high-tech mining equipment built in Germany, Poland, Russia, China, and the U.S. to improve productivity and expand the number of existing mines that are fully automated.

At CIL, for example, productivity (measured in tons per worker, per shift) has been stagnant at 4.92 metric tons (mt) against a global average of 13 mt, and even lower in the case of underground mines at 1 mt compared with a global average of 10 mt per worker, per shift.

If the government’s objective to bring about full mechanization of all domestic underground mines is to be achieved by the current deadline of 2017, domestic miners must make the Indian market attractive for participation by more equipment vendors, the official added.

However, current equipment procurement rules, which mandate that miners need to give highest consideration to price rather than technology, have caused foreign technology and equipment suppliers to avoid the Indian markets, the official said.

CIL and SCCL had been involved in negotiations with technology and equipment vendors in Poland, China and Germany, but both buyers and sellers were hamstrung by current government rules that mandated that all procurement was to be done compulsorily through competitive tenders, with highest consideration to be given to the lowest price offered.

The government is now considering changing those rules to give equal consideration to price and technology during competitive bidding to select global technology and equipment suppliers.

Last month, a delegation representing 15 German mining equipment and technology companies visited SCCL, offering critical high-end mining equipment and technology, including state-of-the-art longwall systems and continuous miners. Delegation members also offered to customize supplies per specific requirements of each of the mines under SCCL.

The government was also exploring the possibilities of negotiated deals between domestic miners and foreign suppliers, backed by the Indian government. For example, the Polish government reportedly held talks with the Indian coal and mines ministries offering to supply mining equipment as part of government-to-government bi-lateral trade negotiations.

India’s progress toward installation and operation of longwall technology has been dismal. A principal reason for the slow rate of adoption of longwall has been from restrictions on its use to blocks left by room and pillar mining, as well as difficulties involved with longwall mining processes co-existing with conventional and semi-automated methods, resulting in management problems. The use of longwall mining also came under a cloud in India following the collapse of longwall installations at the Churcha West mine in 1989 and the Kottadih mine in 1997.

As featured in Womp 2015 Vol 07 -