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Karnataka steel industry body calls for fresh auction on ore mines

Fresh auction of iron mines must be conducted to provide a level-playing field between captive and merchant miners, a Karnataka-based steel and iron ore industry body has demanded.

New Delhi: Fresh auction of iron mines must be conducted to provide a level-playing field between captive and merchant miners, a Karnataka-based steel and iron ore industry body has demanded.

The industry body also claimed that the concerns raised by merchant miners over the possible supply shortage post expiry of mining leases in March 2019 are "baseless" and "unfounded". 

In a letter to the Prime Minister's Office (PMO), Karnataka Iron and Steel Manufacturers' Association (KISMA) said, "In order to provide a level-playing field between captive and merchant miners, it is crucial that fresh auction of iron ore mines conducted and both be given a fair and equal chance to participate in the auction, considering that of all the iron ore mines allotted till date majority belong to merchant miners." 

Merchant miners have cited possible shortage of iron in the market post expiry of mining leases in March and have appealed for extension of leases up to 2030, it mentioned.

KISMA said the extension as sought by merchant miners, if granted, will be a huge setback due to loss in the premium revenue for the government as the auction of mining leases have historically generated extraordinary premium for the government.

"We would like to bring this to your kind attention that the concern of these merchant miners... is unfounded and baseless," it added.

According to the Mines and Minerals Development and Regulation Act 2015, licences of mines expiring will not be renewed and the mines will be allotted on the basis of fresh auction.

According to a report by rating agency India Ratings (Ind-Ra), licences of 288 merchant mines, of which 59 mines are under operations, will expire by March next and if the auction of the mines is delayed it could significantly affect the steel production.

In the letter which has also been sent to the NITI Aayog, KISMA said, "merchant miners were given reasonable transition time of five years from induction of the amendment in the Mines and Minerals Development and Regulation Act 1957 to make mines ready for auction."

Another industry body Pellet Manufacturers' Association of India (PMAI) has also written to the NITI Aayog that there will be no iron ore scarcity in the country post March 2020 as about 200 MTPA mine capacity will still be operational and auctioned virgin iron ore blocks will start adding to the production.

The main tenet of the MMDR Amendment Act 2015 is to put in place mechanisms for improving transparency in the allocation of mineral resources through auction and obtaining for the government its fair share of the value of resources, the PMAI noted.

Extension of the leases expiring in 2020 to 2030 for merchant miners would defeat both the purposes, it has said.

"The merchant miners are interested more in exports due to very high margins and do not bother for any value addition to meet the requirement of domestic consumer, whereas captive miner make much bigger investment in the end use industry like a steel or pellet plant, generating employment and revenue for the exchequer," it added.