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Shares of coal users rise on govt's draft rules on coal block auctions

Shares of coal users rise on govt's draft rules on coal block auctions

Downer's CEO Grant Fenn said the Adani mining services contract would be one of the largest of its type signed in Australia in recent years.

Photo for representation purposes only. (Source: Reuters) Photo for representation purposes only. (Source: Reuters)

Stocks of coal users gained on the domestic stock exchanges on Friday after the coal ministry on Thursday released an approach paper, seeking comments from public on rules for auctioning of coal mines.

Sesa Sterlite stock gained 3.2 per cent, while shares of Hindalco Industries surged 2.7 per cent and CESC shares gained 1 per cent.

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Sesa Sterlite may likely be the biggest gainer from the rules if it wins any coal block, given that it has large capacities without adequate fuel.

Meanwhile, dealers said, CESC may win back important coal blocks given its proximity to the mine and weak competition.

According to analysts, the government's rules put floor price for auctions at reasonable levels for companies.

Additionally, other miners and coal users also see positive rub-off from the decision.

Coal India (CIL) stock climbed up by 2.2 per cent, Gujarat Mineral Development Corp (GMDC) was up 7.6 per cent and JSW Energy gained 5.1 per cent on the domestic bourses.

The government has also constituted a panel, which will meet on December 19, to discuss the draft rules.

In a major blow to the coal industry, the Supreme Court scrapped all coal blocks allocated since 1993 after ruling the selective allocation process was arbitrary and illegal.

(Reuters)

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Dec 19, 2014, 12:54 PM IST
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