By Anurjay Dhal
BHUBANESWAR: High Premium Odisha Mining Auction Heading for Another Legal Battle as Goa based Fomento Moves HC against Changes in Auction Conditions and waiting Court directive to resume its operations in Odisha. Goa based Mining firm, Sociedade De Fomento Industrial Pvt Ltd(SFL), which had got Nadidih Iron Ore & Manganese Block on February 10 this year at a premium of 141.25 earlier held by Rungta Mines Group, has moved Odisha High Court against changes in mining auction terms and conditions.
Nadidih iron and manganese mine, covering an area of 121.405 ha, in Odisha’s Sundargarh district is one of the oldest mine in the Koira mining sector, it has been in operation since January 1961. The mineral block with a geographical area of 73.85 hectares and mineralised area of 36.6 hectares is expected to have iron ore deposit of 20.48 million tonnes.
“Fomento has not surrendered the composite mineral block. The Company has not surrended its mining lease and rather the company was compelled to inititae legal proceedings due to change in conditions imposed by the Odisha Government after the process of auction was alreday underway and after FSL was declared a successful bidder,” sources closelying monitoring mining activities under Joda-Koira mining circles of Keonjhar and Sundargarh said on Thursday.
The petition at present is sub-judice before HC and in the said petition, the Goa based firm, is seeking to enforce the conditions of the auction, sources added. The Odisha Government through its Advocate General assured the court that the governent would not take any prompt action, sources added.
Sources said, successful bidders like Tarama Apartment, Vishal LPG and Foment and few more are not a mood to start operation in their winning blocks under Joda-Koira circles of Odisha’s Keonjhar and Sundargarh. 5 Mines block only started operations while rest keeping quit.
The Odisha Commissionerate of Customs (Preventive) , has however issued a circular against the fraudulent practices of iron ore or iron ore fines exports. At present, exports of iron ore from any port under the Bhubaneswar Customs Commissionereate has found that some unethical exporters are mis declaring iron ore fines(of grade Fe 58% or more) to get an exemption from the export duty of 30%.
Meanwhile, earlier, Union Minister of Steel and Petroleum and Natural Gas Dharmendra Pradhan held a meeting with Chief Minister of Odisha Naveen Patnaik and Union Minister of Mines, Coal and Parliament Affairs Pralhad Joshi. Discussions centred around resolving the issues regarding operationalisation of the auctioned iron ore mines in Odisha where production and dispatch has still not commenced. The lease of these mines had lapsed on 31st March, 2020, pursuant to which fresh auction was carried out.
Pradhan emphasised on the need of an early resolution in this regard by the Ministry of Mines so that seamless availability of raw material to the end user is ensured. This would result in reducing the price of iron ore which has gone up substantially in the last one month due to adverse market sentiments, emanating primarily from reduced supply of iron ore in Odisha from the recently auctioned mines.
As against a production of 123.8MT iron ore in Odisha from Jan 2019 to Nov 2019, total production in the same period in current year has been only 98.2MT. Out of the recently auctioned 24 mines in Odisha, only 5 have been able to start production and dispatch till date. This is the main reason for shortfall in iron ore supply in the country.
Odisha holds immense importance for the Indian steel industry with a major share of raw material reserves and steel production capacity. Early operationalisation of iron ore mines will not only ensure raw material security for the steel industry but also help local employment generation and intensify economic activities in the state, thus driving regional development. It syncs with the larger vision of Mission Purvodaya envisioned by Prime Minister NarendraModi to drive economic growth of eastern India.
During a discussion with Union Ministers, Dharmendra Pradhan and Pralhad Joshi, Odisha Chief Minister Naveen Patnaik emphasised on further mineral reforms to ensure uninterrupted supply of ore to industry to safeguard employment and State revenues.
Mentioning shortages of ore and resultant high price posing challenge for Sponge Iron plants, Small & Medium size Steel plants, Chief Minister Patnaik suggested State and Central PSUs can play a very important role in maintaining level of supply of ore to end user industries at critical moments.Chief Minister Patnaik also proposed reservation of some expired working mineral blocks under provisions of Sec 17A of MMDR Act to State PSUs like OMC to ensure uninterrupted supply of ore to end-user industry. Citing pending revision of minerals & coal royalty, CM requested for early action.
Pralhad Joshi said “Deliberations were held on the status of recently held auctions in Odisha, canceling bidders who failed to start production, brining out stringent rules for nonserious bidders, bringing more mines into auction, iron ore availability and reserving blocks to PSUs,”.It was assured that all ongoing issues will be addressed for earliest resolution.
“The high premiums quoted for Odisha iron ore mines auctioned in February and March have made them unviable. Bidders had paid a huge premium, the average being 106 per cent. As a result, only five out of 19 blocks auctioned are operational.This has resulted in a shortage, which in turn, has led to a surge in prices. “Prices had shot up in the last four months. This was hurting the steel industry,” said Jindal Steel and Power Limited Chairman and former Lok Sabha MP, Naveen Jindal while addressing at the ‘Minerals, Mining and Metals’ e-conclave organised by the Bengal Chamber of Commerce and Industry.
“If a few blocks are auctioned at a time then there is too much competition and an artificial scarcity is created. People end up paying a huge premium and then they become unsustainable,” he explained. Steel prices have increased sharply in the past few months. While it is fueled by revival of domestic demand and in line with international trend, the surge in iron ore prices have also added to it. Moreover, the shortage was impacting steel production for some steelmakers.
The highest premium quoted for Odisha auction block, it may be mentioned, was 154 per cent. JSPL Chairman Jindal said that mining in India was not easy. “We have to make things easier. There must be clarity on rules and regulations,” he said, while adding that there should be a single window mechanism for clearances.
