Mines auction picks up pace, states to get Rs 59,500 crore revenue

The first successful auction took place in Feb 2016, with 2 small limestone blocks in C'garh going under the hammer

The mines auction, which kicked off earlier this year, is now pulling investors in hordes as 10 companies snapped up 16 mines, translating into a revenue of close to Rs 59,500 crore for states.

The first successful auction took place in February 2016, with two small limestone blocks in Chhattisgarh going under the hammer. The mineral-rich state will generate about Rs 18 crore from the two blocks over the next 50 years.

Since then, 14 mines containing iron ore, limestone, gold, and diamond have been auctioned out of the total 76 mines — 47 in the first phase and 29 in the ongoing second phase.

"Auctions are now generating interest in the industry, especially with iron ore blocks being put up for lease. So far, 16 mines have been successfully auctioned and the revenues that will accrue from it will be almost Rs 59,500 crore," a senior government official said.

The lease to mine minerals from these blocks is for 50 years and the total earnings include royalty and contributions for the District Mineral Foundation and the National Mineral Exploration Trust.

Going ahead, there is optimism as more limestone, iron ore, and gold mines will be put for auction, he added.

Even analysts expect that there will be a good response for iron ore mines, and gold will also generate interest.

"Considering the medium to long-term growth expected in the infrastructure and construction sectors, the demand for iron ore and limestone is going to be there, which will attract companies," they added.

Of the 16 mines, Karnataka has auctioned 7 followed by Chhattisgarh (3), Jharkhand (2) and Andhra Pradesh, Odisha, Rajasthan and Madhya Pradesh 1 each.

Mineral wise, iron ore lead the tally with eight mines, followed by limestone (6) and one each of gold and diamond.

Sajjan Jindal-led JSW is the preferred bidder for highest five mines (all iron ore) in the ongoing auction followed by Baldota Group firm MSPL bagging 2 (iron ore) and Burnpur Cement being the preferred bidder for 2 small limestone mines.

Cement companies Penna Cements, Century Cements, Shree Cements and Emami Cement bagged a block each of limestone.

Billionaire Anil Agarwal-led Vedanta won the country's first auctioned gold mine in Chhattisgarh, while Bansal Construction Company secured the mining lease for the first auctioned diamond block (Madhya Pradesh) in India.

A state government official said that auction began on a subdued note under the shadow of record low commodity prices globally, but as prices are appreciating, firms will go for bidding as there will always be the need for long-term economic viability.

"We need to understand that now volatility in commodity prices has become a normal feature, which all the more makes it mandatory for metal producers to ensure long-term availability of raw materials at affordable prices in order to compete. We expect to see good response," he added.