The decision was taken at a cabinet meeting presided by Chief Minister Naveen Patnaik.
"This is a historic decision to bring transparency in allocation of natural resources by putting an end to the hitherto monopoly system," Patnaik said.
Describing the decision as a concrete step forward for "progressive economic reforms", the Chief Minister said the state would gain substantially in revenue generation.
"The state can utilise its flagship development schemes like Biju Pucca Ghar Yojana for shelter, security and other welfare schemes for poor people," he said.
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Chief Secretary G C Pati told reporters that all other lessees of major minerals awaiting second and subsequent renewals would be put up for public auction along with virgin areas, determined and lapsed leases.
However, public auction route would not be applicable in five cases like those leases which have already been issued grant orders and were awaiting execution of lease deed by the state government after being approved by the Centre on the state's recommendations, Pati said.
Those mining leases which were awaiting the approval of the first renewal will also not be for the public auction and the mines lease that have already been granted express order for renewal will not be placed for the auction.