Reserve end-use for composite licences too, say Odisha steelmakers

Odisha steelmakers worried that merchant mining firms might bid heavily

All Odisha Steel Federation (AOSF) has urged the Centre to grant state governments the power to reserve end-use in case of a composite mining licence, similar to what is being proposed for mining leases (MLs).

With the Centre proposing to give state governments the powers to reserve end-use of any mine put up for ML auction only, Odisha steelmakers are worried that merchant mining companies might bid heavily for iron ore composite licences. According to AOSF, most of the mines to put for auction by the state government will be for composite licences, considering it gave an extension to the remaining 26 iron ore MLs a few days earlier.

The concept of a composite licence, a prospecting licence (PL)-cum-ML, for an area where there is inadequate evidence of mineral content has been introduced for the first time in the recently passed Mines and Minerals (Development and Regulation) Amendment Act.

A PL is granted for exploring, locating and proving mineral deposits. An ML is required to extract minerals. “The eligibility criteria for auction of (composite licence) PL-cum-ML should be the same as that of ML,” said AOSF in its letter to the government. Adding that if an iron ore mine is reserved for an “integrated steel plant” for ML, it should be reserved for a composite licence, too.

Most of these steel companies are worried that merchant miners, which are in much better shape, will bid aggressively, making it unviable for steel companies, already facing a slowing in operations. Before the enactment referred to, states had discretionary powers to hand over these licences. Between 2002 and 2008, the Odisha government had signed 49 memorandums of understanding (MoUs) with steel companies, asking them to build steel plants and, in return, assuring an ore mine or proper supply.

“There are more than 20 steel companies in Odisha still waiting for their mines after building their plants according to these MoUs,” said a mid-size steelmaker from the state, now planning to bid for mines.
STEEL QUANDARY

• Centre’s proposal to give state governments the power to reserve end-use of any mine put up for ML auction has steelmakers up in arms
• Between 2002 and 2008, the Odisha government had signed 49 MoUs with steel companies, asking them to build steel plants and assuring an ore mine
• There are more than 20 steel companies in Odisha still waiting for their mines after building their plants according to these MoUs