Odisha may entrust at least three iron deposits it auctioned unsuccessfully last year to state -owned PSUs Odisha Mining Corporation and the state’s newer exploration agency Odisha Mineral Exploration Corporation.
Sources told SteelMint, either of the government mining companies could be asked to operate Guali, Jilling-Langalota and Roida1, that were operation until 31 March 2020 in a move that should help improve iron ore supplies.
A transfer of lease particularly for Guali and Jilling- Langolata auctioned last year might be a little complicated if any of the highest bidders contest a move to deny them rights, said a senior government official. Any allocation to OMC which already mines around 13 mn t iron ore annually, leases would also have to be considered keeping the area cap for iron ore holdings of 57 sq km in Odisha. Staying under this limit could require OMC to surrender some of its claims to iron ore bearing areas that it is not exploiting currently.
Exactly a year ago, Odisha invited tenders for 19 working iron ore mines. Centre and state worked overtime – even amending laws to extend environment clearances to them– for a smooth transition to an era where fifty-year mining rights were granted to the person that promised the highest share of revenues to the state. A year since, it seems fair to conclude that despite the unreasonably high bids, auctions have not been successful.
Barring JSW Steel and AM/NS who are struggling to comply with despatch rules while trying to feed their respective furnaces, production from the rest has been a trickle. Odisha’s rich reserves of high-grade iron ore is critical to India’s steel sector.
Prices of steel’s critical raw material (iron ore fines Fe 63% in Odisha) rose from INR 2,350/t in Aug’20 to INR 6,350/t (ex-mines, including Royalty, DMF and NMET) in early Dec’20 . The government’s move, if true, seems like a reasonable decision under the current circumstances. Industry sources suggest conscious of this burden on steelmaker, the union Steel Ministry is also advocating allocation of mines to Central PSUs such as NMDC or OMDC.
Guali was bagged by Jindal Steel and Power quoting 144% premium. The steelmaker has been reluctant to sign a lease claiming issues with lease’s boundary. Shyam Ores was the highest bidder for Jilling- Langalota, a deposit mined by Essel Mining earlier, but failed to make upfront payments in time.
Official sources told SteelMint, the government is drafting ceding clauses to free up reserves which end up in a dispute and allow for easier surrender of mines – say for a deposit that is likely to be exhausted before the fifty year lease term as in the case of Nadidih BICO. This deposit, for which Sociedade de Fomento bid the highest has an environmental clearance of 5.3 mn t but reserves of a mere 27.04 mn t – a factor that the Goan miner claims makes the mine an unviable prospect at 141 per cent.
Ironically Odisha had set aside Guali for reservation in 2019 but put it up for auction after the Centre, through a notification, clarified that working mines could not be reserved for PSUs.
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