MUMBAI: Steel and sponge iron makers of the country have asked the government to not delay the auction of 288 iron ore blocks whose leases are set to expire in March, 2020, so as to create a level playing field for iron ore users and prevent an extensive loss of public revenue from taking place.
ET has seen the letters that user industries have sent to the government after private merchant miners last week made a plea to extend leases until March, 2030 to prevent a supply crisis of the ore in the market till the auction gets completed.
According to ore users that include JSW SteelNSE -0.13 %, Kalyani SteelNSE 0.63 %, Tata Sponge IronNSE -0.64 %, among others, that stand to win mines through these auctions, private miners have already benefited from a lease extension of five years since 2015 when the Mines and Minerals (Development and Regulation) Act, 1957 was amended. The amendment had said that post expiration of mining leases that were granted before 2015, the mines will have to be put up for auction but private non-captive lease holders were granted an extension of 5 years until March, 2020 to “complete necessary procedures to bring the mines to auction”, a letter addressed to Niti Aayog said.
It also said that by further extending the leases, the government stands to lose huge mining revenue through premiums. The companies estimate a loss of Rs 79,500 crore to Odisha government alone where 16 working iron ore mines with a capacity of 53 MT are nearing expiration.
Also, a committee formed under the chairmanship of the secretary of ministry of mines has recommended certain amendments in the MMDR act that can assure that the auction process is completed before the mines expire. Another suggestion that calls for the ministry of environment and forests (MoEF) to extend environment clearance with existing mines for another three years as well as transfer forest clearance to new lessees can make sure the transfer of mines is smooth, the letters said.
India Ratings has estimated that out of the 288 mines set to expire, 59 are operational with around 85 million tonnes of approved annual capacity. Around 60 MT of production could get disrupted if the auction process was not initiated in the latter half of 2019, said Ind-Ra.