Mineral block auctions delayed
The New Indian Express || 04 April 2019
Fate of around 230 mineral blocks for which leases run out in March 2020 remain uncertain with auctions put on hold until the polls are over
With elections just around the corner, the fate of about 230 mineral blocks for which leases run out in March 2020 remain uncertain with auctions having been put on hold until the polls are done. The central government had planned to auction off about a 100 of these by the end of March, but a lack of bidders, regulatory hurdles at the state level and legal issues have played spoilsport.
Now, officials say, auctions will be held only after polling for the Lok Sabha elections ends in May, raising concerns on whether the process would be completed before the leases run out next year. According to a report from the Ministry of Mines, Jharkhand is set to see the highest number of blocks going under the hammer at 20, followed by states like Rajasthan, Madhya Pradesh, Maharashtra, Odisha, Andhra Pradesh, Chhattisgarh, Gujarat, Karnataka, Telangana and Assam.
Of the 288 blocks for which leases were set to expire by March 2020, just 59 are out of the woods. Nearly a third of the rest comprise iron ore mining leases, followed by minerals like gold, manganese, graphite, diamond and bauxite. The majority of these iron ore mines are located in the country’s largest iron-ore producing state of Odisha. The state planned to hold auctions for 16 blocks in 2018-19, but only five have gone through so far.
The reasons for the delay are two-fold. First, there has been a significant delay in the submission of a report by a Supreme Court-appointed panel which has been looking into violations of mining laws in Odisha post the mining scam, which hit the broadsheets in 2017. The panel, which was supposed to file it within 12-week from the date of its first hearing, is yet to do so. As a result, auctions for nearly 320 million tonnes of mineral capacity which were expected in 2018-19 remains in limbo.
The lessees accused of violations in the scam include some of the larger mines in the state, including Sarda Mines, Rungta Mines, Rungta Sons, Bonai Industries, and Essel Mining and Industries, among others. The second reason is that bidders have remained elusive pan-India. Experts say that if auctions for mines whose leases are set to lapse are not held on time, nearly a third of iron ore supplies to domestic steel mills could be disrupted.
To avoid potential disruption in production however, the central government has advised the states onvolved to begin auctions by July 1 this year to ensure that the new miner has enough time to make the mine functional. “Adherence to the July timeline is sacrosanct to the iron ore auction process and we are fully prepared to auction the mines due to lapse in the stipulated time frame,” Anil Mukim, secretary at Ministry of Mines pointed out.
But the bigger worry is that the new lessee has to apply for fresh environment and forest clearances post reallocation, which could make it at least two years until such a mine can be made operational. This would delay monetisation of the auctioned blocks. Mukim, however, says that talks are on with the Environment and Forest Ministry to extend the validity of key statutory approvals such as clearances by two or three years for mining leases which are due to lapse. If implemented, this will facilitate a seamless change in ownership allowing the new lessee to operate the mines till it acquires the fresh clearances.
Why hold auctions?
The new Mines and Minerals (Development & Regulation), 2015 (MMDR) Act killed the long-standing practice of discretionary allotments of mineral mining leases, switching to a transparent system of allocations through auctions. However, the lease period of merchant miners extended under the section 8A(6) of the MMDR Act are set to expire March 31, 2020
Consensus emerged between the Union Ministry of Mines and the respective states, which were jointly monitoring the process, that the Mineral Auction Rules needed to be amended to make the process more pragmatic without sacrificing the checks on successful bidders.
Under the amended rules, exploration needed to be carried out in these blocks before the auction process could be begun. This means the new auction process needs to be initiated well in advance.