The Odisha government has ruled out supply shock of iron ore after the validity of merchant mines ceases by March 31 2020, putting to rest fears of a crunch in the key steel making ingredient.
“It would not be a supply shock after March 2020. We have allowed both end user industries and merchant miners to build up stocks. Twenty four merchant mines are lapsing by 2020 and we have started the auctions process of these mines. Till now, we have completed auctions of two chromite mines," said R K Sharma, additional chief secretary (steel & mines), Odisha government.
Sharma said about half of the state's iron ore production, which corresponds to a quarter of the country's output, will not be coming from these lapsing mines.
He was speaking at the 'India Mining Conclave' hosted by the Indian Chamber of Commerce (ICC) in collaboration with the steel & mines department, Odisha government.
Odisha has successfully auctioned two lapsing chromite leases -- Misrilall Mines and Kamarda mines -- under the leasehold of B C Mohanty. T S Alloys, a wholly owned subsidiary of Tata Steel has emerged the highest bidder for both the mines.
In addition to chromite mines, the state government has notified 20 more lapsing iron ore and manganese ore blocks for auctions. Moreover, nine more virgin iron ore blocks have been listed for online auctions.
Despite an array of iron ore blocks offered for auctions, a section of the industry dreads raw material shortfall post the expiry of the merchant mining leases.
Odisha has 17 operative merchant iron ore mines which are producing around 55 million tonnes (mt) against the approved environment clearance (EC) limit of 80 mt.
The state boasts of the country's largest iron ore output. In the last fiscal year, Odisha churned out 114 mt, contributing more than a half to the nationwide production of 207 mt.
The state's iron ore output is important since it largely feeds the domestic steel plants and other dependent end-use industrial units while only a fraction (of production) is shipped overseas.
“After March 31, there could be a major disruption. Availability of raw material will be in trouble if the future of EC and forest clearance (FC) with respect to the lapsing mines is not decided. Also, it remains to be seen if the initial euphoria on auctions will sustain or it will meet the fate of coal block auctions," said Manish Kharbanda, convener (steel & mines), ICC Odisha State Council and advisor at Jindal Steel & Power Ltd (JSPL).