You are here: Home » Economy & Policy » News
Business Standard

Mining law ensures auction cannot take off in Odisha

The SC granted Odisha six months to resolve the issue during which the state was allowed resumption of operations in eight mines

Deepak Patel  |  New Delhi 

With the Union government getting Lok Sabha clearance for the Mines and Minerals (Development And Regulation) Amendment (MMDRA) Bill, it is becoming clearer that Odisha will not be able to auction any of its 56 operating iron and manganese ore mines in the near future.

The Supreme Court, in its order dated May 16, 2014, had cancelled 26 of these mining leases, saying these "leases cannot be allowed to be operated" until the state government passes orders under the MMDRA Act, 1957. These 26 mines were being operated under "second and subsequent renewals" even as the state government had not taken any decision to such effect.

The SC granted Odisha six months to resolve the issue during which the state was allowed resumption of operations in eight mines. In all, 38 mines are currently operational. For the remaining 18 mines, the state government asked for more time following which the SC, on February 27, gave it two more months to sort out the issue. But under the mining Ordinance, promulgated by the Centre in January, 18 mines also become eligible for extension. The Ordinance has been placed in Parliament in the form of a Bill for approval "The legality of the extensions to these 18 mines is not yet clear," said a mining expert on the condition of anonymity.

Odisha had planned to earn revenue through auctioning the 18 mines. A senior Odisha government official said no decision on auction had been taken because of legal ambiguity. "By promulgating this MMDR Ordinance, the Union Government has crippled the state government's efforts to cancel these licences, resulting in a huge revenue loss (since they cannot be auctioned immediately) to the state," said Tathagata Satpathy, member of Parliament belonging to Odisha's ruling Biju Janata Dal.

Under the Ordinance, leases of merchant miners awaiting renewal get extended till 2020 while miners with end-use projects get an extension till 2030. Moreover, validity of existing leases has been extended for 50 years. The Odisha government has opposed both the provisions. "We are pained by the fact that these provisions were not in the draft proposal circulated for consultation with state governments," said Prafulla Kumar Malik, mines minister, Odisha, in January during a meeting of state ministers in Delhi.

During a debate on the Bill in the Lok Sabha, Satpathy reiterated his government's stand, stating there was no need to extend mines till 2020 or 2030 or for the next 50 years. "You could have given a lease extension for six months, one year or two years or a set timeframe for the state governments to complete their base work to have auctions within that particular period of time."

Besides, the requirement to prove "mineralisation" before an auction has assured that none of the other 102 Odisha mines, most of them containing iron ore deposits, is auctioned in the coming three to four years. "This Bill mandates proven mineralisation before putting the mines up for auction. These provisions will prove to be detrimental as the government says they would not be able to have auctions for the next two to three years just to prove the mineralisation of the mines," said Satpathy.

These 102 non-operating mines were formally shut down by the SC for want of forest and environment clearances. "Mineral deposits in none of the mines in Odisha have been measured up to G-1 (mineralisation) level and right now we do not have the technology or equipment to undertake this task which needs much deeper drilling. So, it will take at least three to four years, or may be more, to meet the criteria before putting the mines up for auction," said R K Sharma, secretary, steel and mines department, Odisha.

According to a leading Odisha miner, auctioning any of the operating mines in the coming one or two years is almost impossible for the Odisha government. "The government has nothing to offer for auction. Before this talk of mineralisation, we should remember that most of these 102 mines still do not have environment and forest clearances," he said.

"Unlike coal auction, matters regarding iron/manganese ore mines are pending either with the Odisha government or the central government or the courts. It will take a long time to resolve this situation," he added.

The Odisha government's plans to auction iron/manganese mines would also suffer because of the recent amendment proposed by the Centre to Panchayats (Extension to the Scheduled Areas) Bill, 2013. The draft amendment, sent to the Odisha government for its comments, has been opposed by the latter.

The proposed Bill says the consent of the Gram Sabha or the Panchayats at the appropriate level will be mandatory prior to grant of prospecting licence or mining lease for major and minor minerals in the Scheduled Areas.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, March 03 2015. 22:31 IST