Iron
ore: Bellary
With the
demand in steel sector picking up, Karnataka’s seven iron ore mines in Bellary
The final bid
for the iron ore mines in Karnataka was in the range of 59 to 111 per cent of
the floor price — which is monthly value of the mineral dispatched from the
mine. JSW group — whose firm JSW Steel is the largest steel company in the
country — won five iron ore mines in Karnataka. MSPL, a major iron ore mining
company, won other two iron ore mines of the state this month.
The first
phase of mines auction, which has been going on since December last year, has
seen auction of total 16 non-coal mines till now by seven state governments.
The eight mines which were auctioned by other state governments — six of them
were limestone, one gold and one diamond — did not see such a high bid from the
companies. The bids for these mines were in the range 8 per cent to 59 per
cent. Odisha’s iron ore mine was auctioned at a bid of 44 per cent of the floor
price in March 2016.
The auction
of the 16 non-coal mines is estimated to bring a total revenue of Rs 59,447
crore over the next 50 year period for these state governments.
As per the
new mining law — Mines and Minerals (Development and Regulation) Amendment Act,
2015 — which came into effect from January 2015, the non-coal mines have to be
auctioned by the respective state governments. Under the old mining law, the
state governments only had the powers to grant the mining lease to any company
as per their discretion.
The auction
process takes place in two rounds. Mineral auction rules, which have been
formed under the new mining law, clearly state that in the first round, the
bidders have to quote the percentage of the monthly value of the mineral
dispatched from the mine. The highest percentage quoted then gets marked as the
floor price for the second round.
Subsequently,
the bidders get ranked on the basis of the descending initial price offer
submitted by them. The first 50 per cent of the ranks or the top five bidders,
whichever is higher, are termed as qualified bidders for participating in the
second round of electronic auction. The second-round auction then follows the
simple forward-bidding process, where the bidder quoting the highest percentage
is deemed as the winner.
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