Coronavirus lockdown may interrupt operations in 21 mines in Odisha

Although the govt extended the validity of all statutory permits by 2 years for smooth transition, the lockdown is bound to delay the resumption of these mines

The outbreak of the deadly Covid-19 pandemic has queered the pitch for seamless continuity in operations of 21 iron ore, manganese and chromite mines in Odisha. The state government had recently auctioned these blocks whose leases are expected to expire by March 31, 2020.

To facilitate a smooth transition in ownership of mines and their uninterrupted operations, the government, through an Ordinance, extended the validity of all statutory permits by two years. The state government too, showed alacrity in completing auction formalities well before the end of lease tenure of mines. But a nationwide lockdown to contain the spread of coronavirus and the consequential delay in paperwork needed to resume these mines is bound to delay the recommencement of the mines. Miners expect a delay of at least a month.

“Only a few critical departments of the state machinery are functioning amid this Covid-19 induced lockdown. Since the steel & mines department is not operative now, the new leaseholders have to wait for necessary approvals. All successful bidders need a vesting order from the department before they could extract ore from the blocks”, said an industry source.

The delay in timely resumption of merchant mines had raised fears of demand-supply mismatch. Together, the 21 mines have approvals to raise around 70 million tonnes per annum. Most of the small to mid scale steel plants, sponge iron units and pellet makers are dependent on the merchant ore market to feed their units.

A standalone iron ore miner feels the secondary steel players might suffer owing to delay in mining activity at the lapsing blocks. On the contrary, many steel plants have already amassed iron ore stock sufficient to last for three to six months.

Also, in the aftermath of Covid-19, transportation of raw materials has diminished by nearly a half due to non-availability of enough drivers to ply trucks and curbs imposed on inter-state freight movement. What has stuck out like a sore thumb is the dread among workers over Covid-19 scare.

A letter from the Union steel secretary to state governments to ease lockdown orders on operative mines, steel industries, process plants as well as entry and exit of workers and movement of raw materials and finished products to and from the plant premises has not fully calmed frayed nerves.

“Though we have been freed from the restraining order, we are unsure if we could get the manpower to run normal operations. There is still trepidation among workers”, admitted a merchant miner.

State run Odisha Mining Corporation (OMC) is facing resistance from locals in despatch of iron ore at its flagship Gandhamardhan and Daitari mines. Production, though, is continuing normally.

Odisha had attracted frenzied bids to 21 merchant blocks offered for online auctions. Average premium was in excess of 100 per cent. JSW Steel proved to be the major disruptor, securing four iron ore mines. ArcelorMittal won the Thakurani mine, quoting a premium of 107 per cent. Among other key steel makers, Jindal Steel & Power Ltd (JSPL) bagged the Guali mine after committing a premium of 144 per cent.