Centre heeds Odisha's plea, hikes mine lease area cap to 58 sq km

The road to swift conduct of auctions of iron ore and associated minerals in Odisha hobbled by more than a year of face-off between the Centre and the state over mining lease area limits has smoothened.

The Union mines ministry after due scrutiny has heeded the state government's call to hike the ceiling on lease area for iron ore and associated minerals to 58 square kilometres (sq km).

The revision in mineral lease cap clears the impasse to the seamless hosting of iron ore auctions by Odisha. The state is the largest producer of the steel making ingredient, producing 114 million tonnes (mt) in FY19, accounting for more than 50 per cent of the nationwide iron ore output of 207 mt.

The mines ministry's latest notification has spelt a bout of relief to iron ore auctions stalled since last fiscal owing to the tussle over the proposed revising of area limits.

By invoking sub-section (1) of Section 6 of the Mines and Minerals Development & Regulation (MMDR) Act of 1957, the Mines ministry has hiked the area limit of mining lease in respect of iron ore and associated minerals to the extent of 58 sq km in Odisha.

Backing its decision, the ministry said the mining lease area limit needed to be enhanced to facilitate supply of iron ore and associated minerals in the interest of development of the steel industry.

The ministry also took note of Odisha’s repository of iron ore, its status as the largest ore producer and its role in the future to help the country reach its envisaged crude steel production target of 300 mt by 2030.

Quoting figures from the National Mineral Inventory 2015 published by the Indian Bureau of Mines (IBM), the ministry said the total iron ore resources in the state have been assessed at 7558 mt.

"From the point of view of scientific mining and mineral blocks, there is more focus on larger mining blocks. National Steel Policy, 2017 has targeted the steel production of the country to the tune of mt per annum by 2030. The state of Odisha is the highest iron ore producing state in the country, therefore it requires to boost up production for the development of steel and allied industry," Veena Kumari Dermal, director, Union mines ministry noted in the order.

Under Section 6 (1) (b) of MMDR Act, any leaseholder with 10 square kilometres (km) or more area in its control is debarred from acquiring any more mining lease in a state.

To overcome this restraining clause, the state government had shot off a missive to the Union mines ministry, to revise the area limit to 58 sq km for iron ore and associated minerals. The state government’s argument is premised on the fact that Steel Authority of India Ltd (SAIL), a central sector PSU, possesses approximately 55.01 sq km of mine lease area in Odisha. Besides, 2.77 sq km area has been reserved by the central government for exploration and exploitation through SAIL. It may be noted that mining lease area limits have been expanded to 75 sq km in Jharkhand and 50 sq km in Chhattisgarh.

The Union mines ministry which had previously spurned the state’s request vetted the proposal afresh. Also, the ministry had instructed the state government to hold on the auctions process till a decision was worked out.

The tussle between the central mines ministry and the state government had taken a toll on Odisha’s mineral block auctions. No block could be put to online auctions in FY19 as the matter relating to mine lease area cap was enmeshed in litigation. In this fiscal too, the state government despite having readied many iron ore blocks, was unable to auction them, pending a decision from the Centre.