Tenders for nine iron ore and manganese blocks in Odisha likely in July

Timing of auctions critical, premiums unlikely to match merchant mines

After the successful online auctions of 24 merchant mining blocks, the Odisha government is bracing for auctioning nine virgin mineral blocks.

A source close to the development said the state government is likely to issue Notice Inviting Tenders (NITs) in respect of the nine iron ore and manganese blocks in July this year. The blocks identified are Purheibahal, Chandiposhi, Rengalaberha North-East, Gandhalpada, Netrabandh Pahar (West), Dholtapahar, Jumka Pathriposhi, Unchabali and Kalimati.

Strikingly, the state mines department had made an abortive bid to auction both Chandiposhi and Purheibahal in May 2018- this preceded the online auctions of the merchant mine blocks. But a PIL filed in the Delhi High Court, contesting the participation of a bidder with more area under leasehold than what Rules permitted then had queered the pitch for auctions. The contentious provision that hobbled the road to auctions, stalling it for more than a year smoothened after the Centre finally revised the cap on mine lease area (for Odisha) to 58 square kilometres (sq km).

It may be noted that online auctions of 24 merchant blocks with deposits of iron ore, manganese and chromite had witnessed frenetic bidding activity. Close to 300 bidders vied for these blocks. The premiums for these coveted resources were steep- on an average they stood at 104 per cent. Since these mines were already operative with available attendant infrastructure for unearthing and transporting ore, they evoked resounding response.

Moreover, the new leaseholders did not have to fret for clearances as the Centre by the dint of an Ordinance, had extended the validity of all key approvals, including the critical environment & forestry clearances by two years.

However, the bidding response to the ensuing virgin or freehold blocks is unlikely to be anywhere near the merchant mines auctioned before their lease tenures ceased on March 31, 2020. And, for virgin blocks, the lessees will be tasked with obtaining all necessary approvals before they can lay their hands on the untapped resources.

Industry observers are also sceptical on the timing of auctioning the virgin mines.

“In the backdrop of Coronavirus pandemic, the state government will struggle to get firm bidding interest for the virgin blocks. Players like Tata Steel and Rungta Mines who failed to garner a single resource at the previous round of auctions are likely to make some aggressive bids. Yet, the subdued market demand and the shadow of the pandemic will influence auctions outcome”, said a standalone miner.

Meanwhile, the merchant mines in Odisha are cruising to restart operations. The state government has issued vesting orders in favour of all successful bidders. Shortly, the new leaseholders would sign Mine Development & Production Agreements (MDPAs) and eventually, the lease deeds to keep the mines running again.

Since the ‘deemed clearances’ granted by the Centre are valid for two years from the date of expiry of lease validity, the new lessees will stick to the same technology and comply with the already prescribed mining plans of the Indian Bureau of Mines.