States rush to prepare lapsing blocks for auctions after new MCDR rules

Mineral-bearing states are scrambling to prepare blocks lapsing by March 31, 2020 for auctions. The urgency to ready the mineral blocks for auction stems from the recent notification of the Draft Mineral Concession and Development (Amendment) Rules, 2018 by the Government of India.

The MCDR is proposed to be amended to draw the roadmap for exploration so that the blocks can be auctioned before their validity ends. This is being done to ensure that production of key minerals like iron ore, manganese and chromite is not severely impacted due to the expiry of the leases. The Union mines ministry has targeted to auction the blocks by May 2019.

According to the notified rules, mine leaseholders are required to submit exploration plans within 60 days from the date of the notification. Thereafter, the respective state governments would approve the plans over the next 30 days.

So far, mineral-rich states have been slow to ready the blocks for auctions. With the exception of Andhra Pradesh which has submitted an Action Plan for exploration, progress in other states has been slack.

The Odisha government has shown readiness to auction the lapsing mineral blocks.

“We are taking all necessary steps to avert any raw material shortage that may arise out of lapsing of 30 mineral blocks. Out of the 30 mineral blocks, 24 have been ordered to complete exploration by the end of March this year so that they can be auctioned in advance. The state government will ensure a seamless transition of the mineral blocks”, said a senior Odisha government official.

Data compiled by the Union Mines Ministry says 288 leases of iron ore, chromite, limestone, manganese, bauxite, graphite, limestone, garnet and kyanite are due to lapse by March 31, 2020. Goa has the most number of mines (160) headed for expiry. Next to Goa are Karnataka and Odisha with 45 and 30 mining leases respectively. Of the 288 mines, 59 are in a working state and the balance is non-working leases.

In Odisha, 17 merchant iron ore leases are set to expire by March 2020. The ending validity of these mines is set to trigger deficit of 66 million tonnes of iron ore in annual capacity. If other states like Karnataka and Jharkhand are factored in, the total loss in iron ore production capacity could be 85 million tonnes a year, said an industry source.

Major mining leases in Odisha lapsing by March 31, 2020 include the ones held by Rungta Mines, KJS Ahluwalia, Serajuddin & Company, Kaypee Enterprises, Kalinga Mining Corporation, Mid East Integrated Steel Ltd, KN Ram, RB Das, Tarini Prasad Mohanty, KC Pradhan and Lal Traders.

As many as 88 major mineral blocks have been notified by nine states for auctions. Of this, 33 blocks have already been auctioned by the states. Revenue to the states spanning the entire lease period is estimated at Rs 1.28 trillion.