With an abundance of mineral wealth, Odisha, the steel capital of India, alone is capable of propelling the Indian steel industry to double its production by 2031. Odisha’s mines, if auctioned, can become the principal provider to India’s targeted 300 million tonnes (mn t) steel capacity by 2030. Around 25% of India’s iron ore and manganese mines can be unlocked for captive users and merchant miners through this process.
Odisha has already triggered the process of auctioning and, in 2020, witnessed aggressive participation by 86 companies, resulting in successful auctioning of 17 mines. Moreover, these auctions witnessed high premiums which even went up to 154% of the reserve price which proved to be a bonanza for the state.
Dispatches from Odisha’s auctioned, non-auctioned mines
As per an official report, ArcelorMittal Nippon Steel India (AM/NS India) and JSW Steel dispatched a combined 21 mn t of the material from their auctioned mines in Odisha. This contributed to about INR 12,000 crore (by way of royalty and premium) to the state government’s exchequer during Jul’20-Jun’21 despite the initial interruptions faced in fully operationalising the mines. The mines were hardly operational for six months in the first year since commencement of production.
On the other hand, about 56 mn t was dispatched from the non-auctioned mines of Tata Steel (3), SAIL (4), Rungta (2) and Essel (1) during the above-mentioned period, contributing about INR 6,189 crore to the state’s exchequer.
Contribution to the state’s economy
In the first quarter of CY’21, Odisha’s revenue collection is expected to be at INR 9,049 crore, up from INR 2,735 crore generated in the corresponding period last year (CPLY). It should be noted that this spike is achieved despite the Covid-19 headwinds and with only 16 auctioned mining blocks starting production operations.
For instance, if approximately 250 mn t of iron ore from Odisha is put to auction at an average price of INR 3,000/t and 75% of the average auction premium, the state would be able to generate a revenue of around INR 56,250 crore in a year. Clearly, the potential is humongous.
Unlocking Odisha’s mineral resources through a transparent auctioning process could trigger Odisha’s $1 trillion economy dream and India’s target of achieving $5 trillion GDP by 2024.
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