Tata Steel to gain from Odisha move to raise area limit for iron ore mines

The Odisha government has recommended to the Centre to shift the bar on the area to be held by an iron ore mine lessee from 10 sq km to 75 sq km, a move which is expected to benefit the steel giant Tata Steel in the upcoming auction of iron ore blocks in the state.

Odisha is currently readying to auction two more iron ore mines Chandiposhi and Purheibahal in April, this year. The state had earlier auctioned three iron ore blocks. All these were meant for end-user industries.

"Among the participants in the previous auctions, Tata Steel was the only bidder that impugned the area limit clause mentioned in the auction rules as the lease area already held by the company well exceeded the 10 sq km limit", said a government official.

Tata Steel, at present, has six iron ore/manganese (an associated mineral) leases in the state with combined lease area of about 50 sq km.

Quoting section 6 of MMDR Act, the auction rules said, "The State Government may not be able to issue the letter of intent (LoI) without prior approval from the Central Government in case the bidder holds or may hold (including the area covered under the mining lease being auctioned under this tender document) one or more mining leases covering a total area of more than 10 square kilometres in respect of any mineral or prescribed group of associated minerals in the State of Odisha".

However, Tata Steel had participated in the previous auctions despite this restrictive clause and a warning from the state government it won't be issued any LoI even if it emerged as the successful bidder in the auction process.

The company had repeatedly petitioned the government to increase the bar of 10 sq km limit imposed for bidders of iron ore blocks following which the government had set up a committee to consider the plea.

Though the company had wanted the maximum area limit to be raised to 120 sq km, the committee has recommended to the Centre to increase it to 75 sq km, said a source.

With the iron ore mines put on the block being reserved for captive users and no other bidder with steel plants in the state having 10 sq km lease area under its hold, the increase of the area limit will help Tata Steel to a great extent, sources added.

It may be noted, the Centre had earlier allowed raising of the similar area limit for bauxite deposits to 50 sq km to facilitate public sector National Aluminium Company (Nalco) acquire more mines.