E-auction system set to continue for one more year in Karnataka

The term of the SC appointed Monitoring Committee to supervise e-auctions ends on April 12, 2014

E-auction system for sale of iron ore is set to continue for one more year in Karnataka as the state government and steel industry players have expressed support for its continuation. The state government has even shown interest in taking over the system from the Supreme Court appointed Monitoring Committee.

The Supreme Court-appointed Monitoring Committee will cease to exist from April 12, 2014 as its term was only for two years as directed by the Apex Court in 2012.

The Apex Court, in its order dated April 13, 2012, had stated that the e-auction system should be in place for two years until the normalcy is restored in the mining.

The Karnataka government, in its affidavit filed before the Court recently, indicated that it was willing to take over the operation of e-auctions and set up a monitoring committee to supervise the e-auction process.

The Supreme Court is set to hear the matter on April 21.

The continuation of e-auction system is significant as it would ensure buoyancy in the collection of royalty revenue for the state government. The system has brought in transparency in the collection as well as led to removal of under invoicing by the miners.

Supreme Court in its order on September 2, 2011 had appointed Central Empowered Committee (CEC) to oversee e-auction of iron ore from Karnataka. CEC in turn had formed a Monitoring Committee to carry out the orders of SC. The e-auctions were a result of large scale illegal mining which caused immense environmental degradation of the adjoining areas.

The auctions were expected to provide a temporary relief to the iron and steel industry in the state, which has been reeling under severe shortage of iron ore following a mining ban imposed by the apex court in Bellary, Tumkur and Chitradurga districts earlier. The apex court, while banning the mining had permitted to auction 1.5 million tonnes (mt) iron ore a month through e-auction route from the stock of 25.88 mt, lying at the mines in the State in September 2011.

Monitoring Committee (MC) in its initial term comprised of three members – H R Srinivasa, Director of Department of Mines & Geology (DMG) as Convener, Deepak Sarmah, Additional Principal Chief Conservator of Forest (APCCF) as Chairman and U V Singh, Chief Conservator of Forest. For the purpose of auctioning, MSTC was identified to carry out e-auction through their portal.

According to data compiled by Delhi-based iron ore research firm, OreTeam Research, the e-auction system has seen sale of 74.05 million tonne of iron ore produced and stocked up in Karnataka from September 2011 to March 31, 2014. On a monthly average production basis, the first year i.e. 2011-12 (September-March) has been the most successful year for the auction as the monthly average sales were close to 2.9 million tonne per month as compared to 2.4 million tonne witnessed in 2013-14.

“As ordered by the Supreme Court, the e-auctions process will end on April 12, 2014. We are waiting for the Court to issue further directions in this matter. The Federation of Indian Mineral Industries (FIMI) is planning to file an affidavit in the Court for the restoration of normal open market operations,” said FIMI sources.

The e-auctions will continue until further notification is issued by concerned authorities, said state government officials.