Auctions of fresh iron ore blocks in the country have hit a speed breaker. Since the formulation of the revised Mines and Minerals- Development & Regulation (MMDR) Act of 2015, 17 iron ore assets have been put to online auctions, including nine in this financial year.
But, the larger question is on auctions of newly explored blocks. Of the 17 iron ore assets auctioned to this date, 12 were conducted in Karnataka. Auctions in the iron ore rich southern state were done conforming to a Supreme Court pronouncement before the new MMDR Act was enacted. eight of the 17 blocks received final bids, with a staggering premium of over 100 per cent, the highest being 275 per cent of the sale price notified by the Indian Bureau of Mines. Besides Karnataka, three iron ore blocks have been auctioned in Odisha and one apiece in Jharkhand and Madhya Pradesh.
In Odisha, not a single block could be auctioned in this financial year. The row over the ceiling on mineral leasehold by a lessee intensified recently with the filing of a public interest litigation (PIL) in the Orissa High Court. The petitioner questioned the Odisha government’s decision to permit Tata Steel to partake in its mineral auctions when the steel maker is already occupying over 50 sq km of lease area in its grip. This violates one of the prime conditions of auction eligibility as no lessee which is already holding more than 10 sq km could participate in online auctions. Tatas are yet to respond to the petition.
On the same premise, another petitioner had filed a case with the Delhi High Court in May 2018. The petition challenged the Odisha government’s move to go ahead with auctions of two new iron ore blocks- Chandiposhi and Purheibahal by allowing the same Tata Steel to be a contender in the auctions process. Delhi High court in an interim pronouncement, withheld the auctions of the two blocks till some clarity emerged out of the eligibility definition for the bidders. Before this case, the Odisha government, in March 2018, had urged the Union mines ministry to reconsider the cap on leasehold area and revise it upwards to 75 sq km. But the central government hasn’t yet swung to action mode and is still dallying with the decision. And, the case is still sub judice with the court.
“It’s almost the middle of March and no block could be successfully auctioned in Odisha. With the case on revising mineral lease area limits still under the jurisdiction of courts, we assume this fiscal year has proved to be a blank for us. We are banking on the new ruling dispensation to pace up auctions after the elections”, said an Odisha government source.
The other sore point is the disproportionate asset distribution in the auctioned blocks. Of the 17 blocks, six have deposits of less than 15 million tonnes (mt) and even for these blocks, mining leases are envisaged to be signed for 50 years, according to the statutory terms. Insufficient reserves in the six auctioned blocks have flagged concerns on long-term raw material security for meeting the requirement of end-use projects.
The future of iron ore blocks is beset with uncertainty. Key iron ore producing states of Odisha, Jharkhand, and Chhattisgarh are riddled with disparate roadblocks to the smooth conduct of auctions.
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