Lease expiry to create 66 mn tonne iron ore deficit in Odisha after 2020

Steel mills, other industries operating without captive ore sources to be hit hard as there is no roadmap for auctioning of the leases

The lapsing of validity of 16 merchant mines in Odisha by March 31, 2020 is set to create a deficit of 66 million tonne (mt) of iron ore. Steel mills and other end use industries operating without captive ore sources are likely to be hit hard as no roadmap has been prepared for auctioning of these leases.

As per the provisions of the amended Mines and Minerals (Development & Regulation) Act, the validity of existing non-merchant mines have been extended till March 31,2020 and those of captive leases till 2030.

Major mining leases lapsing by March 2020 include the ones held by Rungta Mines, KJS Ahluwalia, Serajuddin & Co, Kaypee Enterprises, Kalinga Mining Corporation, Mid East Integrated Steel Ltd, KN Ram, RB Das, Tarini Prasad Mohanty, KC Pradhan and Lal Traders.

"There will be sharp reduction in iron ore sourcing to the tune of 66 mt as leases of 16 non-captive mines would expire by 2020. Though there are a number of mineral blocks in Odisha, many blocks are not yet explored up to the G2 level. Incomplete exploratory work in the existing leases and lack of a roadmap for auctioning of mines in 2020 will add to the demand-supply gap", said an industry source.

Iron ore blocks going for auctions need to be explored at least up to G2 level as per the policy of the Government of India. Most of the mining leases expiring in 2020 have not been explored to that level. There is an exploratory obligation on holder of mining lease as per laid down conditions in the approved mining plan under Mineral Concession Development Rules (MCDR), 1988. Rule 22 of Mineral Auction Rules 2015 stipulates to complete detailed exploration at G1 level and prepare a detailed feasibility study report, over the entire area under the mining lease, within a period of five years from the date of commencement of such mining lease.

"The state government needs to publish a roadmap for auctioning the leases which are due to expire in 2020. Moreover, the state government needs to enforce on operating leaseholders to comply with their exploratory obligations within the stipulated time", he added.

As of now, there are 47 iron and manganese ore mines with an approved EC (environment clearance) limit of 154 million tonne. Of this, there are 37 operating merchant mines of which 16 leases are due to expire by March 31, 2020 and such leases have an EC limit to produce 66 mt of iron ore. The remaining 10 are captive mines with an approved production ceiling of 53.10 mt.