Some bidders participating in mines auction beyond requirement for end-use plants: Assocham

Industry body Assocham has sought amendments in the tender documents for the mines to be auctioned, saying there were some players bidding for blocks beyond mineral requirements for their end-use plants.

"As you are aware that there is no restrictive clause in the MMDR (Mines and Mineral Development and Regulation) Act/Tender document as far as the eligibility of the bidder is concern, which offers an opportunity to bidders to indulge into hoarding and accumulating the resources," Assocham said in a letter to the mines ministry.

As a case in point, one of the companies in Karnataka has garnered 7 million tonne per annum (MTPA) iron ore resources and has a pelletising plant with production capacity of mere 1.2 MTPA, the industry body said.

The company has an annual iron ore requirement of 1.344 MTPA only.

"Despite having annual requirement of 1.344 MTPA, this bidder has garnered mines in the state auctions with total annual production capacity of 5.78 MTPA," it said.

In addition to that, the bidder already had mines other than auction with a total production capacity of 1.3 MTPA; thereby totalling annual production capacity of mines held by the bidder is 7 MTPA, the letter said.

As a result, these resources will never convert to production and steel industry would continue to suffer for want of raw material.

Such practices were not only counterproductive but also against the overall objective of MMDR Act, it said adding that the state government will also lose revenues and auction premium, it said.

"Hence, to avoid such a scenario, some additional provision can be made in the standard tender document for auction of mineral block in line with the eligibility condition as prescribed in the standard tender document for the auction of coal mines,"