Monday, 12 October 2015

Mineral auctions on way
from The Telegraph,Business, Calcutta Edition of 12th October 2015

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.

Goa mainly produces low grade iron ore that is exported to China and other countries.

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