Iron ore production dips in Odisha, three bidders surrender blocks

Of the 46 operating mines, whose leases expired on March 31, 2020, 24 mines are in Odisha.

Published: 25th January 2021 07:51 AM  |   Last Updated: 25th January 2021 07:51 AM   |  A+A-

Iron Ore

Image of stacked iron ore used for representational purpose.

Express News Service

BHUBANESWAR: With shortfall in production and supply of iron ore from large number of mines auctioned before lease expiry on March 31, 2020 affecting the industries, vesting orders have been issued to 19 mines in Odisha.

In fact, iron ore production has significantly declined in the State - from 90.28 million matric tonne (MMT) and 102.81 MMT during April and November period of 2019 to 60.46 MMT and 91.58 MMT respectively during the same period in 2020.

Three successful bidders, Socied De Fomento Industrial Pvt Ltd, winner of Nadidih iron ore block, Vishal LPG Industries (Nadidih iron ore and manganese block), Tarama Apartment Pvt Ltd (Teherai iron ore and manganese block), surrendered their blocks by forfeiting security deposits as they found it unsustainable. 

The State government, meanwhile, has revoked bank guarantees of Jindal Steel and Power, winner of Guali iron ore mines, and Shyam Ores Jharkhand Pvt Ltd, winner of Jilling-Langalota iron ore block, for refusing to execute lease deed.

Non-operationalisation of operating mines auctioned before March last year has created acute shortage of iron ore in the country. During 2019-20, production of iron ore in the country as on September, 2019 was 110.95 MMT while cumulative production of ore till September, 2020 was only 76.01 MMT registering a drop in production by 31.5 per cent.Foreseeing the crisis, the Centre has proposed amendment in Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules (MCR), 2021 prescribing stricter conditions against defaulting leaseholders.

The draft amendment of MCR-1960, circulated to states for pre-legislative consultation with stakeholders, mandates successful bidders to make payment equivalent to the revenue share and other statutory levies that would have been payable at the prescribed level of minimum production/dispatch targets on quarterly basis to ensure smooth availability of minerals.

“In case lessee does not maintain minimum dispatch prescribed in the rule for three consecutive quarters, State government may terminate such lease after giving a reasonable opportunity of being heard,” the draft Bill said. Of the 46 operating mines, whose leases expired on March 31, 2020, 24 mines are in Odisha.

As various measures taken by the Central and State governments to address the short supply have been insufficient in meeting demand, this prompted the Centre to go for further amendment in the Rules to ensure smooth supply of ore.

“Decline in production and dispatch of important mineral such as iron ore not only leads to spike in its market prices but also affects the manufacturing of iron and steel in the country which is one of the core sectors of the economy,” the Ministry of Mines said.

The Ministry has proposed to strengthen norms of minimum production/dispatch through amendment of Rule 12A of the MCR Rules, 1960 in order to ensure sustained supply of mineral in the market in future.

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