After nudge from Centre, Odisha government gets ready to auction 10 mineral blocks
BHUBANESWAR: After waiting for more than two years for a bullish metal market and a recent nudge from the Centre, the state government has finally approved the proposal of the Steel and Mines department for auction of 10 mineral blocks, mostly iron and manganese ore.
The government has approved auction of four iron ore mines - Koira in Sundargarh district, and Roida-1, Putulipani and Jalahuri in Keonjhar district, whose lease period have expired since 2021. Jhumka-Pathiriposhi West iron ore block in Sundargarh is a virgin mine put up for auction.
Three blocks with a mix of deposit of iron ore and manganese located at Orahuri, Bhanjikususm in Sundargarh, and Roida-D in Keonjhar district are in the auction list. The government has also given permission for auction of two virgin bauxite blocks at Karlapat in Kalahandi district and Nunapaimali in Rayagada district.
Even after more than seven months of coming to power, the BJP government was reluctant to take a call on e-auction of mines fearing lack of response from bidders due to the current low metal prices, as it would lead to significantly lower revenue earnings for the state.
“The decision to go for auction of 10 mineral blocks including two virgin bauxite mines in a not so conducive market situation is most possibly driven by pressure from the Union Mines minister G Kishan Reddy, who during his recent visit took up the issue with Chief Minister Mohan Charan Majhi,” said sources in the mining industry.
“It is not only Odisha, but most of the mineral-bearing states are reluctant to go for auction fearing abnormally low bids which could lead to long-term revenue loss. The state government sets floor prices for auction based on its perception of the fair value of the mine. The bidders’ perception of the fair value of the mine could be lower than the government,” the sources added.
After the auction regime come into play following major amendments in the Mines and Minerals (Development and Regulation) Act, 2015, the mining industry has contributed significantly to the state’s economy which is now 10 times what the state was getting as mining revenue a decade back.
Citing the example of Kasia iron ore and dolomite block in Keonjhar district, the sources said Jindal Steel and Power Ltd (JSPL) had bagged the block by offering a premium of 118.1 per cent over the floor price of 95.6 per cent. The Guali iron ore block had received the highest premium of 144 per cent from JSPL which later refused to execute the lease deed, they added.