Sajjan Jindal-led JSW Steel has bagged the immense Nuagaon iron ore block in Odisha in keenly contested iron ore auctions.
The block, currently held by merchant miner KJS Ahluwalia with deposits of 790 million tonnes of iron ore, is the first of 21 lapsing blocks to have been successfully auctioned. JSW Steel quoted a premium of 95.2 per cent and won the block at online auctions, upstaging strong contenders like ArcelorMittal and Vedanta Ltd.
Owing to its enormous deposits, the reserve price for the Nuagaon block was pegged at 50 per cent of the sale value of the embedded ore. Also, the net worth to bid for this block was fixed at around Rs 3800 crore, making the incumbent lessee- KJS AHluwalia ineligible to participate at the electronic auctions.
The Nuagaon block is expected to provide an assured raw material security to JSW Steel which is setting up a 13.2 million tonne per annum (mtpa) greenfield steel mill near Paradip. The steel plant, along with attendant infrastructure like Captive Power Plant (CPP), is coming up on land once acquired for the $12 billion Posco project, touted as India’s highest FDI project then. JSW Steel has pledged an investment of Rs 55,000 crore on the steel mill complex to be set up in a staggered manner.
Moreover, a recent Ordinance to the Mines and Minerals-Development & Regulation (MMDR) Act permitting deemed extension of all statutory clearances for operative mines by two years will allow JSW Steel to start unearthing iron ore from Nuagaon block without hassles.
Odisha has resumed the online auctions after it was forced to annul the previous auctions started in October last year. Amid backlash from select bidders, the state steel & mines department had to tweak the tender norms and relaunch online auction by notifying fresh Notice Inviting Tenders (NITs) on December 6, 2019 barely three days after the initial auctions were called off.
Interestingly, the row was over the alleged unfair bidding for the coveted Nuagaon block. Bidding for this huge block turned unsavoury as both parent companies and their subsidiaries contested concomitantly. Six Group companies of the Sajjan Jindal controlled JSW Group had vied for this block that rankled rival bidders like ArcelorMittal and Vedanta, goading them to file written submissions with the state government, protesting the ambiguous terms of the tender documents.
Given the contentious provisions and negative sentiment, Odisha was forced to bite the bullet and announce a sudden annulment of auctions on December 3.