Sponge iron makers demand auction of lapsed mining licences in Odisha

The Supreme Court, in its pronouncement in a case filed by NGO Common Cause, had instructed the Odisha govt to collect compensation from the miners for excess ore dug out between 2000-01 and 2010-11

Sponge iron manufacturers have sought auctioning of mining leases in Odisha which have been cancelled over the non-payment of the Supreme Court mandated compensation for excavating ore beyond approved limits.

The Supreme Court, in its pronouncement in a case filed by NGO Common Cause, had instructed the Odisha government to collect compensation from the miners for excess ore dug out between 2000-01 and 2010-11. In a scathing indictment of rapacious mining, the apex court held that miners needed to pay 100 per cent compensation. An interpretation of the court order meant the miners needed to pay Rs 17,576 crore, a notional loss figure extrapolated previously by the court appointed central empowered committee (CEC). The report by CEC revealed that miners excavated 215.5 million tonnes of iron and manganese ore beyond approved limits. The court ordered that compensation was to be paid by miners on or before December 31, 2017.

However, nearly two years after the court order, many miners are yet to comply with the court's direction. The state government has managed to mop up about Rs 13,000 crore from the erring miners. Miners who failed to shell out the compensation had their leases revoked by the authorities.

Meanwhile, sponge iron players said that no decision had been taken on the leases of errant lessees, an action warranted under Section 4 of the amended Mines and Minerals- Development & Regulation (MMDR) Act, 2015.

“But unfortunately no action is being  taken in this regard. If these leases are auctioned, then this will help the industry as well as the government to increase the mineral production in the country”, Vijay Jhanwar, president of Chhattisgarh Sponge Iron Manufacturers Association (CSIMA) wrote to the Union mines secretary.

CSIMA also flagged concerns on private mining licences in Odisha expiring by March 31, 2020. 

“According to our estimates, we expect the government to generate at least a 60 per cent average premium along with upfront payment of at least Rs 10,000 crore if all the working mines are auctioned immediately. This will also help the government generate an additional revenue of Rs 10,000 crore besides the royalty and District Mineral Foundation (DMF). If some small changes are made in the auction rules, it will help in a smooth transition of leases and the domestic steel industry would also become competitive. We hope that the government will start the auction process immediately and allow small producers to bid in a consortium”, the letter said.

According to a report published by a committee of the Union mines ministry, licences of 334 non-captive mines across the country are due to expire by March 2020. Of this, only 49 are operational - 33 of them are working iron ore mines in Odisha, which boast of an annual production capacity of 55 million tonnes. 

When new iron ore blocks were auctioned online in Odisha, they fetched premiums of up to 100 per cent. A back of the envelope calculation by Associated Chambers of Commerce & Industry (Assocham) illustrates that the government stands to gain  Rs 79,500 crore revenue by auctioning the the licences of these mines in Odisha. All these 16 iron ore mines in Odisha have been explored up to G2 level and hence, eligible for auction.

Other industry bodies such as Pellet Manufacturers Association of India (PMAI) and Indian Chamber of Commerce (ICC) have found common ground with Assocham, pressing for auctioning the expiring mineral leases. The industry bodies have contested the suggestion by Federation of Indian Mineral Industries (Fimi) to extend the  validity of merchant mining leases up to 2030.