Odisha merchant miners stare at glum future after coronavirus outbreak

The drying of export demand and flagging consumption in the domestic market in the aftermath of Coronavirus outbreak has left merchant iron ore miners in Odisha distraught.
 

Since the enforcement of lockdown orders, barely any activity has occurred at the merchant leases between March 19 and 31.

No fresh production or despatches of iron ore happened during this period of lull. For merchant mine owners, the only glimmer of consolation was the movement of some pre booked iron ore. Barring captive mines, especially the ones under the leasehold of Tata Steel and Steel Authority of India Ltd (SAIL), there is no buzz of activity at other mines in the state.

The outbreak of Covid-19 has only delayed the process of recommencement of mining from the merchant leases. The validity of these leases ceased on March 31, 2020.
 

“Almost all merchant miners are sitting on huge inventory of iron ore. They are clueless on how this stockpile would be liquidated.

No shipments of iron ore are being sent overseas as demand has dried up. Going ahead, the situation would be critical for merchant leaseholders as consumption from steel and other end use industries will be subdued post the Covid-19 outbreak.

Merchant mines will be forced to ramp down production and go for salary cuts of the employees to stay afloat in a depressing market”, said an official with a standalone merchant mining company.

Odisha had successfully organised online auctions of 21 iron ore, manganese ore and chromite mines formerly under the custody of merchant mines. The state government has even issued Letters of Intent (LoIs) to all successful bidders. After the expiry of their lease tenures on March 31 this year, these mines were supposed to start operations seamlessly. To facilitate their uninterrupted operations, the Central government by virtue of an Ordinance, had extended the validity of all statutory approvals by two years.

But the outbreak of Covid-19 and the consequent announcement of lockdown had thrown a spanner in the works of these mines. Of late, the state steel & mines department has initiated some activity to recommence operations at these mines.

Deepak Mohanty, director of mines and special secretary (steel & mines department) with the Odisha government has called for realisation of NPV (Net Present Value) at the rate of Rs 7.5 lakh per hectare for forest area falling within the mining lease. NPV is the amount collected for diversion of forest land for non-forest purposes. Collection of NPV is a precondition to issue vesting orders under Mineral Concession (Amendment) Rules, 2020 for enabling restart of the merchant mines.