The government of India said Thursday it will auction 10 coal blocks with extractable reserves of 356Mt to cement and steel companies.

The auction process will begin on 8 June with the government notifying the blocks for different sectors. Bid documents for the blocks will be on sale from that day.

The government will invite technical and financial bids for the mines and the last date for submission of the documents will be 21 July. The auction will take place between 11-17 August 2015.

Nomura says a coal block auction at sums that imply coal prices that are at the same level of imported coal will increase the industries' power costs by around 2.5 per cent. Earlier the government would assign coal supply pacts at its discretion, charging only a small sum as royalty. Now it wants to auction rights to coal supply pacts for the full market price, Dow Jones reported.

Earlier this year, UltraTech Cement participated in the Central government’s e-auction for the allocation of coal blocks. The company was awarded the Bicharpur coal block situated in Madhya Pradesh. With reserves of 29.12Mt, it will provide fuel security for the company’s plants within the vicinity of the mines for 30 years, UltraTech said.