New Delhi, Oct. 11: The Centre is set to start the auction
of minerals other than coal next month.
About 71 mines will
be put up for bidding on behalf of the states, with 20 iron ore blocks in
Karnataka, shut down on court orders, part of the exercise.
Top officials said
state-run Mecon had surveyed the mines and ruled out auctions in about a score
of them as these had land acquisition issues or were in areas affected by
militant activities.
The government
expects to auction around 200 mines on behalf of the states in at least two
phases. Top steel makers, such as Tata Steel, JSW and Essar, can be expected to
bid for the mines as also aluminium manufacturers such as Vedanta and Hindalco.
India classifies
manganese, iron ore, bauxite, limestone, kyanite, sillimanite, barites,
chromite, silica sand, fluorite and quartz as major minerals where the central
government is the final arbiter of allocations based on state recommendations.
Other minerals are treated as minor, to be allocated, auctioned or disposed of
by the state governments.
Earlier moves to
bring in a bidding process to grant the lucrative iron ore mining rights were
strongly opposed by the mineral-rich states as they feared it would be against
their interests.
However, the Centre
managed to get the states on board by assuring them that they would receive
earnings from advance royalty.
Steel plants need
fresh iron ore leases to continue operations, while a large number of proposed
projects would like to buy mines to ensure cheap and dependable supplies.
India, a net exporter
of iron ore three years back, had imported a record 15 million tonnes last year
to feed its steel mills.
This year, with
production going up and new mines expected to be thrown open, imports are
projected at a lower level but still a significant 6 million tonnes.
Similarly, lack of
bauxite was cited as the chief reason why Anil Agarwal-led Vedanta Resources
started shutting down its one-million-tonne a year aluminium sheet rolling
division and foundry in Chhattisgarh.
The competition among
bidders will be on production sharing - those offering the highest share to the
state will get the mine.
Successful bidders
will have to give a bank guarantee equal to three years of the share of
production. If the mine is not developed in time, the guarantees will be
encashed and leases cancelled.
Meanwhile, miners in
Goa expect to sell 20 million tonnes of iron ore that they have been allowed to
mine from the state and are prepared to slash prices to make the mineral
competitive amidst a demand slowdown.
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