The Odisha government has decided to keep in abeyance the process of online auctions of nine virgin or freehold mineral blocks of iron ore and manganese. There are apprehensions that auctioning these blocks may not evoke a resounding bidding response given the looming shadow of Covid-19 pandemic.
“Presently, there is a slump in market demand after the outbreak of Coronavirus disease. We have decided to postpone the auctions of virgin blocks by two months so that we get firm response from the bidders”, said an Odisha government official.
Odisha has lined up nine iron and manganese ore blocks- Purheibahal, Chandiposhi, Rengalaberha North-East, Gandhalpada, Netrabandh Pahar (West), Dholtapahar, Jumka Pathriposhi, Unchabali and Kalimati on October.
It may be recalled that online auctions of 24 lapsing merchant mining blocks of iron ore, manganese ore and chromite in Odisha had elicited an overwhelming response. All the bigwigs of steel and iron ore mining sectors like ArcelorMittal, Vedanta, Tata Steel, JSW Steel, Jindal Steel & Power Ltd (JSPL) had demonstrated frenzied bidding interest in the auctions. The average premiums to bids stood at a whopping 104 percent.
The state government fears that going for immediate auctions of the virgin mines may not attract firm bidding interest.
The focus is now on hastening the operations of merchant mines. Their lease validity ended on March 31, 2020. The mines have got ‘deemed extension’ in respect of all statutory approvals for two years to continue mining activity seamlessly. The state government has issued vesting orders to all the successful bidders. Mineral Development Cum Production Agreements (MDPAs) have been signed with the leaseholders. That apart, lease deeds have been executed with 17 out of 24 bidders. A few of the merchant mines have also started trial production.
Almost all the iron ore leases barring one held by Serajuddin will change hands. Sajjan Jindal led JSW Steel had turned out to be the key disruptor at electronic auctions in Odisha, bagging four mines with aggressive price bids. Global steel behemoth ArcelorMittal won the Thakurani mine formerly held by Kaypee Enterprises.
The reopening of the merchant mine blocks is also expected to shore up revenues for the state government. During April-May, the state has barely been able to garner around Rs 700 crore of mining revenue as collections have tanked considerably after the Covid outbreak. In FY20, Odisha collected mining revenue in upwards of Rs 10,000 crore.
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