Tata Steel may be disqualified in Odisha iron ore lease auction

Tata Steel is likely to be disqualified in the e-auction conducted by the Odisha government for allotment of iron ore mining lease under the new MMDR (Mines and Mineral Development and Regulation) Act, as the company is found to be ineligible under one of the eligibility criteria for the bidders relating to lease area held previously in the state.

The eligibility clause under Section 6 of the MMDR Act says: "The state government may not be able to issue the letter of intent without prior approval from the Central government in case the bidder holds or may hold (including the area covered under the mining lease being auctioned under this tender document) one or more mining leases covering a total area of more than 10 sq km in respect of any mineral or prescribed group of associated minerals in Odisha."

Tata Steel, at present, has six iron ore/manganese (an associated mineral) leases in the state with combined lease area of 10 sq km.

"This will automatically disqualify Tata Steel in the auction process," said senior official of the state steel and mines department.

 

However, Tata Steel sees a ray of hope in the option given in the clause for seeking permission of the Centre to relax the norm in deserving cases.

"Section 6 of the MMDR Act says the state can seek the approval of the Centre to relax the lease area limit in deserving cases. We had earlier got relaxation from the Centre on this front for renewal of leases. We recently commissioned an integrated steel plant at Kalinga Nagar. At the time of signing the memorandum of understanding, the state government had promised to give us additional 250 million tonnes (mt) of iron ore linkage for the Kalinga Nagar plant. As we hold the possibility of maximising revenue for the government and have put up a mega value-addition plant in the state apart from fulfilling other auction conditions, the state government should approach the Centre to relax this norm for us," said a Tata Steel official.

Stressing on the need of acquiring iron ore resources in Odisha, he said a high-level committee constituted by the state government in 2010 had assessed the total reserve of six mines of Tata Steel in Odisha at 500 mt, which was enough to sustain the operation of both Jamshedpur and Kalinga Nagar plant at their full capacity for about 15 years.

But, a government official involved in the auction process said the state was unlikely to recommend Tata Steel's case to the Centre for relaxation of eligibility norm as it might invite legal litigation from other bidders for the iron ore mine.

Odisha had invited bids for Ghorhaburhani-Sagasahi iron ore block having deposits of 100 mt in December last year. Seven steel firms - Tata Steel, Jindal Steel & Power, JSW Steel, Bhushan Steel, Bhushan Power & Steel, Essar Steel and public-sector firm Rashtriya Ispat Nigam participated in the technical bid.

"A committee of the state government is evaluating the bids submitted by these seven companies. We will announce the names of successful bidders on February 25 after considering all criteria," said Deepak Mohanty, Director of Mines, Odisha.