By Our Correspondent
BHUBANESWAR/NEW DELHI: “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.
Meanwhile, Union Coal, Mines Parliamentary Affairs Minister Pralhad Joshi along with his Cabinet Colleague, Union PNG-Steel Minister Dharmendra Pradhan held talks with Odisha Chief Minister Naveen Patnaik regarding operationalisation of auctioned iron ore mines in Odisha, which had lapsed on March 31 2020 and where production and dispatch has still not commenced.
“In a meeting with CM Odisha Shri @Naveen_Odisha and Minister of Mines, GOI @JoshiPralhadji, discussed several issues regarding operationalisation of auctioned iron ore mines in Odisha, which had lapsed on March 31 2020 and where production and dispatch has still not commenced,” Union PNG-Steel Minister Dharmendra Pradhan tweeted@dpradhanbjp.
“As against 123.8MT iron ore produced in Odisha from Jan to Nov 2019 total production in the same period in current year has been only 98.2MT. Out of the recently auctioned 24 mines, only 5 have been able to start production and dispatch till date, leading to shortfall of supply,” he said.
“Emphasised the need for an early solution for ensuring seamless availability of raw material to the end user, which will result in reduction of the price of iron ore which has gone up substantially in the last one month due to adverse market sentiments and reduced supply.Ensuring raw material security for the steel industry is a critical element of our vision to achieve 300 MT production capacity by 2030 and contribute to the overall vision of Aatmanirbhar Bharat,” Pradhan added.
Chief Minister Patnaik emphasized on further Mineral Reforms to ensure uninterrupted supply of ore to industry and safeguarding the employment and State revenues.Odisha has been one of the first State to successfully conduct auction of mineral blocks in accordance with the orders of the Supreme Court.
However, there have been some glitches in commencement in mining operations leading to disruptions in production and dispatch leading to shortage of minerals for end user industries and price rise.Chief Minister emphasized that such disruptions and uncertainties in production and dispatch are undesirable, especially during these times. Shortages of ore and resultant high price has posed a challenge for the Sponge Iron plants, Small and Medium size Steel plants.
This has affected the revenues of the State and the employment of the people dependent on the sector.Chief Minister Patnaik suggested that the State and Central Public Sector Undertakings can play a very important role in maintaining the level of supply of ore to the end user industries at such critical moments.Their strong presence in the Mineral market will ensure smooth supply at reasonable prices. This shall go a long way in mitigating the constraints faced by the MSME in this sector.
Patnaik proposed reservation of some of these expired working mineral blocks under provisions of section 17A of the MMDR Act to State PSUs like OMC to ensure uninterrupted supply of ore to the end-user industry.Odisha supports further mineral sector reforms and streamlining of procedures which will go a long way in unlocking the mineral resources of the Country and give a boost to the economy.
One of the longstanding issues of Odisha and other State Governments has been the revision of royalty for minerals other than coal. This revision has been pending since 2017. Similarly, royalty on Coal has been due since September 2017.
Earlier, while addressing Global Mining Meet, Union Coal, Mines and Parliamentary Affairs Minister, Pralhad Joshi had said that the results of Mining reform have been encouraging and with this ordinance in place, recently Odisha has completed the successful auction of large number of iron ore mines. However, some of the successful bidders are trying to evade the process of auctions by delaying the production.
He had added that such cases will be dealt seriously and in coordination with the State government, the Ministry is contemplating to bring stringent provisions in the act so that non serious players are terminated and barred from future auctions. The Government is fully committed to ensure that the auction of mineral resources of the country is a complete success and it generates revenue and employment for the state governments.
