By Anurjay Dhal
BHUBANESWAR: The bidding for as many as 19 running mines under Joda-Koira-Rairangpur mining circles of Odisha’s mineral rich Keonjhar, Sundargarh and Mayurbhanj districts, which had began on January 31, is ended by Tuesday night. The Directorate of Mines on Tuesday put the 18th Block as last one in the current bidding for auction. Due to court case, auction for Badampahar block under Rairangpur circle in Mayurbhanj held by Lal Trade Agency Pvt Ltd, a group company of Ghanshyama Misra and Sons Pvt Ltd, which retained its Gorumahisani block put on hold.
However, sources in Steel and Mines Department informed that bidding for 8-9 virgin mines will be started soon. So far after auction, JSW Steel Ltd has been declared as the “Preferred Bidder” vide communication received from the Director of Mines, Odisha for 3 iron ore mines (Nuagaon Iron Ore Mine, Narayanposhi Iron & Manganese Ore Mine, Ganua Iron Ore Mine) in the State of Odisha, in the Auctions held by the State Govt. of Odisha on 31st January 2020, 1st February 2020 and 4th February 2020, respectively, sources said on Tuesday.
The estimated iron ore resources of the aforesaid mines are around 1091.835 Million tonnes.The highest final offer price by the Company to become a “Preferred Bidder” as a % of average monthly prices of iron ore of different grades and quality published by Indian Bureau of Mines in the State of Odisha from time to time is Nuagaon Iron Ore Mine – 95.20%, Narayanposhi Iron Ore & Manganese Mine – 98.55% and Ganua Iron Ore Mine – 132.00%
Official sources said, Kanther-Koira Manganese Block of Rungta Mines Ltd, the last working mines has come under the hammer. Six companies including the lessee RML , Yazdani, TP Sao, Vedanta, Anand Exports & PM Granite are in the race for the mines. Kanther-Koira manganese block has an estimated reserve of 0.615 MT. RML Group has till now lost all its running blocks and fighting to defend its last empire in Odisha’s mineral rich Keonjhar-Sundargarh region.
Meanwhile, the ongoing bidding of 19 running mines under Joda-Koira-Rairangpur mining circles of Odisha’s Keonjhar-Sundargarh and Mayurbhanj districts was on Monday received a jolt with SC putting an hold on transfer of EMIL’s Jilling-Langalota Block till further order. Sources said, EMIL, a subsidiary of Aditya Birla Group had approached the Supreme Court over the ongoing bidding in Odisha. Sources said, other miners, who were lost their blocks due to aggressive bidding may also approach the Court over lease transfer.
Kolkata based Shyam Ore on had bagged the Jilling-Langalota iron ore block in Odisha’s Keonjhar district by committing to pay 135 per cent of sale to the Odisha government.Current lessee of the block is with ESSEL Mining Industries Ltd, a subsidiary of Aditya Birla Group.
Shyam Ore had emerged winner among Adani Enterprises, Serajuddin & Co, JSW Steel, Rungta’s Feegrade and ESSEL Mining Industries, who were the top contenders for the block with an iron ore reserve of 72.84 million tonnes.
Meanwhile, market experts said that the prices of iron ore may rise in the short term as bidders for mines in Odisha have paid nearly twice the required amount. The mine auctions attracted aggressive bids for large and small mines alike, with the average premium paid at 114 percent. A merchant miner, Shyam Metaliks Ltd., paid the highest premium for a mine in Jilling-Langalota, while JSW Steel Ltd. paid the lowest, for Nuagaon mine. JSW Steel has successfully bid for as many as four mines, bagging nearly 40 percent of the 72 million tonnes in ore capacity. Its peer ArcelorMittal has bid for one mine at a premium of 108 percent.
The premium for iron ore mines in Odisha, which ranges between 90 percent and 140 percent, is greater than the average premium of around 80 premium paid during auctions in Karnataka over the past two years, an expert said.
The aggressive bidding is expected to continuously crowd out merchant miners besides potentially resulting in higher iron ore price, Edelweiss Securities said in a report. This, it said, is expected to benefit pure-play iron ore companies like NMDC Ltd. and integrated players like Tata Steel Ltd. and Steel Authority Of India Ltd, he added.
A Koira based mines owner while agreeing, said merchant miners like Serajuddin and Co. Ltd. and Essel Mining Ltd., would be affected the most. That’s because the cost curve, according to him, has moved up by Rs 2,000 per tonne for a merchant miner and for them to be profitable, the selling price will have to move up at least Rs 500-1,000 per tonne from the current levels.
Steelmakers that have won bids, including ArcelorMittal and JSW Steel, and aim to save on logistics costs by installing slurry pipelines to contain the impact of the high premiums, too, may take a hit in the short term. Such installations would take at least three years to materialise, sources said.
Indian Bureau of Mines-notified prices dip as captive market share increases. Chances of potential litigation by bidders could reduce double taxation and royalty mechanisms. Ore prices would fall further following the resolution of inventory at the Sarda mines in Odisha and as merchant miners seek to monetise their inventory stockpiles.
The premium offered by various Merchant Miners and Big Steel makers to bag to these mines blocks have raised many eyebrows as to how the new lease holders will manage it. It may be noted here that mining sector in Odisha was badly hit over the past 5 years due to a scam worth Rs 80,000 crore and several round of probes are going on but another Big Scam is in offing considering the high premium offered by bidders in ongoing mining bidding.
Sajjan Jindal led JSW Steel topping the list with 4 Big mines followed by Serajuddin and Co and its subsidiary Yazdani International, Kashiv International -Debabrata Behera, ArcellorMittal India Pvt Ltd, Shaym, Ore, Patnaik Minerals Pvt Ltd, KN Ram Mines Pvt Ltd, Sociedad De Fomento Industrial Pvt Ltd, Vishal LPG Fuels Pvt Ltd, Ghanshyam Mishra and Sons Pvt Ltd, Tarama Apartment Pvt Ltd, Agrasen Sponge Industries Ltd, so far won blocks while big players like KJS Ahluwalia and Prasant Ahluwalia brothers, Essel Mining and Industries Ltd of Aditya Birla Group , the Chaibasa, Jharkhand headquarters, Rungta Mines Group were among those isolated in the current bidding. Ahluwalia Brothers lost 3 of their major Blocks while RML Group lost around 5 Blocks till now followed by couple of blocks of EMIL.
Meanwhile, several activists in Bhubaneswar alleged about irregular, conspiracy-driven iron ore auctions as they argued that premiums crossing as high as 150% and more.“The current bidding has widened abundant scale for a massive Mining Scam and the Naveen Patnaik led BJD Government has to clarify about the aggressive bidding, which will promote mining scam,” said an activist.
“The aggressive biddings with an aim to loot the Odisha’s valuable iron ore are the reasult of a nexus between a few Industrial Houses, close to the power corridor, political leaders, bureaucrats and Mines Contractors,” said he. He also raised finger towards a nexus between Sajjan Jindal of JSW Steel and B Prabhakaran of Thriveni Earth Movers Pvt Ltd, the most talked about Mining Contractor.
The first block that was auctioned for Nuagaon mines of 792.93 MnT reserves was won by JSW Steel Ltd with 95.2 per cent bidding for the block. The second block was auctioned for Narayanaposhi mines with 190.6 MnT reserves and was also won by JSW Steel with its bid at 98.55 per cent. The JSW Steel bagged the 14th iron ore block in auction by committing to pay 110 per cent of the sale to the State Government for Jajang in Keonjhar district.
The Thakurani(reserves 180 MnT), fetched a premium at 107.55 per cent and was won by ArcelorMittal. The Balda iron ore (reserves 210.17 MnT) was retained by Serajuddin and Co. at a premium of 118.05 per cent. Shyam Ore even bagged the Jilling-Langalota iron ore block in Keonjhar district by committing to pay 135 per cent of sale to the Odisha Government. The Tata Steel, Steel Authority of India Limited and JSPL have not been bidding aggressively, sources said.
This premium is a percentage of the price of the iron ore that is set by the Indian Bureau of Mines each month for different States and grades. The premium will be taken by the State. So Serajuddin and Co. which owned at a premium of 118.05 per cent will pay 118.05 percent of the monthly value of the IBM set price of iron ore to the State Government. This will be on per tonne of iron ore sold by the company. Many small players like Shyam Ore, Debabrata Behera, Kashiv International and KN Ram will also pay high premium ranging from 100% to 150%.
Apart from the premium , the new owners will pay to the State Government a royalty of 15 percent of base price, DMF fund contribution 30 percent of royalty and National Mineral Exploration Trust of 2 per cent of royalty that will be charged separately on the base price. Premium and royalty will be charged on sales of iron ore, sources added.
The high premiums will lead to illegal mining, unethical market manipulation, rate fixing and other massive mines corruption. Since many of the large companies are emerging as the winners, they will become the new price makers in the market and the ultimate burden will pass to the consumers, they alleged.
They expressed grave concern over the manipulated system of iron ore mining business in the State, urged the Government to act immediately to ensure the interest of the State and the people was protected.
