With no roadmap in sight, 66 MnT iron ore capacity at stake

As no roadmap is ready to decide the fate of 16 merchant mines in Odisha due to lapse by March 31, 2020, the future of such leases with a combined iron ore production capacity of 66 million tonnes annually is at stake.

According to the provisions of the amended Mines and Minerals Development & Regulation (MMDR) Act-2015, the validity of non-captive or merchant iron ore leases was extended till 2020. Before the lease expiry of the mines, states were supposed to formulate a roadmap to facilitate auctions of the lapsable resources.

But to this date, no concrete plan has been laid out to auction the mines due to lapse by 2020 despite repeated reminders to mineral bearing states by the central mines ministry.

“No work has been done yet to prepare the lapsing mines for auctions. Even our request to the Mines ministry to extend the validity of those mines has went unnoticed”, said an official with the Federation of Indian Mineral Industries (FIMI).

Major mining leases lapsing by March 2020 include the ones held by Rungta Mines, KJS Ahluwalia, Serajuddin & Co, Kaypee Enterprises, Kalinga Mining Corporation, Mid East Integrated Steel Ltd, KN Ram, RB Das, Tarini Prasad Mohanty, KC Pradhan and Lal Traders.

“There will be sharp reduction in iron ore sourcing to the tune of 66 million tonnes as leases of 16 non-captive mines would expire by 2020. Though there are a number of mineral blocks in Odisha, many blocks are not yet explored up to the G2 level. Incomplete exploratory work in the existing leases and lack of a roadmap for auctioning of mines in 2020 will add to the demand-supply gap”, said an industry source.

Iron ore blocks going for auctions need to be explored at least up to G2 level as per the policy of the Government of India. Most of the mining leases expiring in 2020 have not been explored to that level. There is an exploratory obligation on holder of mining lease as per laid down conditions in the approved mining plan under Mineral Concession Development Rules (MCDR), 1988. Rule 22 of Mineral Auction Rules 2015 stipulates to complete detailed exploration at G1 level and prepare a detailed feasibility study report, over the entire area under the mining lease, within a period of five years from the date of commencement of such mining lease.

“The state government needs to publish a roadmap for auctioning the leases which are due to expire in 2020. Moreover, the state government needs to enforce on operating leaseholders to comply with their exploratory obligations within the stipulated time”, he added.

The fears on iron ore demand-supply imbalance have been compounded with the Supreme Court refusing to budge from its stand of extending the deadline for payment of penalties by the mining companies. The apex court also ruled out staggered payments as requested by miners. The ruling could have far reaching repercussions on the iron ore sector as scores of mines are already staring at closure.

Major Mining Lease Lapsing  in 2020-:

Capacity in MT p.a.