Coronavirus lockdown may interrupt operations in 21 mines in Odisha

Apr 1,2020

The outbreak of the deadly Covid-19 pandemic has queered the pitch in 21 iron ore, manganese, and chromite mines in Odisha for seamless continuity operations. Recently, the State government auctioned those blocks whose leases are scheduled to expire by March 31, 2020.

In order to facilitate a smooth transition in the ownership of mines and their uninterrupted operations, the Government extended the validity of all legislative permits by two years through an Ordinance. The state government, too, displayed alacrity in completing the formalities of the auction long before the end of the mines 'contract. But a nationwide shutdown to prevent coronavirus spread and the consequent delay in the paperwork required to reopen these mines is bound to postpone the mines recommencement. Miners expect a minimum delay of one month.

"Amid this lockout caused by Covid-19, only a few vital departments of state machinery are operating. Since the steel & mines department is not operational now, the new leaseholders have to wait for the approvals needed. A vesting order from the department is required by all successful bidders before they can extract ore from the blocks, "an industry source said.

The delay in the timely resumption of merchant mines had increased concerns about the mismatch in demand-supply. The 21 mines have approvals collectively to produce about 70 million tons per year. Most of the small to medium-sized steel plants, sponge iron units, and pellet makers are dependent on the merchant ore market for their units to feed.

A standalone iron ore miner feels that secondary steel players can suffer as a result of delaying mining activity in the lapse blocks. Instead, several steel plants have already accumulated enough iron ore storage to last for three to six months.

Furthermore, in the aftermath of Covid-19, the transport of raw materials has decreased by almost a half due to the lack of adequate drivers to ply trucks and curbs put on inter-state freight movement. What's sticking out like a sore thumb is a fear of Covid-19 scare among staff.

A letter from the Union Steel Secretary to the governments to facilitate lock-down orders on operating mines, steel mills, process plants as well as the entry and exit of employees and the movement of raw materials and finished goods to and from the plant premises has not completely cooled down frayed nerves.

"While we've been released from the restraining order, we're unsure if we can get the manpower to run regular operations. Staff are still trepidation, "a merchant miner admitted.

State-run Odisha Mining Corporation (OMC) faces local opposition in an iron ore dispatch at its Gandhamardhan and Daitari mines flagships. Yet development usually continues.

Odisha had drawn frenzied bids for the online auctions offered to 21 merchant blocks. The average premium was over 100 percent. JSW Steel proved to be the biggest disrupter, capturing four mines of iron ore. ArcelorMittal has secured the Thakurani mine, claiming a 107 percent premium. Jindal Steel & Power Ltd (JSPL) bagged the Guali mine after paying a 144 per cent premium among other primary steelmakers.

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