Over 50 companies in the race for 10 iron ore blocks in Odisha

Nov 7,2019

More than 50 companies are vying for 10 iron ore blocks notified for auctions by the Odisha government. All of the blocks are lapsing merchant mines whose validity ceases by March 31, 2020.

At a pre-bid conference convened by the state steel & mines department, more than 50 companies turned up. Apart from top-notch steel producers like Tata Steel, JSW Steel, Jindal Steel & Power Ltd (JSPL) and ArcelorMittal, all leading merchant miners in Odisha and Goa, as well as secondary steel makers, participated at a pre-bid conference recently.

“We had an overwhelming turnout at the pre-bid conference. It is expected that all the players will aggressively bid when we conduct the electronic auctions for the iron ore blocks”, said a government official.

Last month, the state directorate of mines had notified 10 lapsing iron and manganese blocks- Nuagaon, Thakurani, Siljora-Kalimati, Jilling-Langalota, Jaribahal, Roida-II, Jururi, Narayanposhi, Mahulsukha, and Ganua. All these leases are currently under the leasehold of the merchant or non-captive miners, the lease validity of which ceases by March 1, 2020. The deadline for submission of bids is November 18. Three of the 10 blocks are reserved for end-use plants, the rest is meant for bidding by merchant miners only.

Odisha has hitherto auctioned three iron ore blocks. It was the first state to auction an iron ore block- Ghoraburhani-Sagasahi block with over 99 million tonnes of deposits. The block was bagged by Essar Steel that later turned insolvent. Then two more virgin iron ore blocks were put to online auctions where Bhushan Steel Ltd (now Tata Steel BSL) and Bhushan Steel & Power Ltd (BSPL) emerged as successful bidders.

Of late, the Odisha government put to electronic auctions two chromite blocks- Misrilall Mines and Kamarda mines held by B C Mohanty. Both merchant mines drew high premiums and were won by T S Alloys, a fully owned Tata Steel subsidiary. T S Alloys placed steep bids for bagging both mines- 88.5 percent (of the sale value of the block) for Misrilall Mines and 96.8 percent for Kamarda.

If the initial outcome at these mines is any indication, the bidding momentum is likely for the other mines as well, especially some of the prized deposits in iron ore. To stave off lower bids, the state government has kept the reserve price of blocks a bit on the higher side. For iron ore blocks with resources up to 10 million tonnes, the floor price is kept at 15 percent of the sale value of the mineral asset. For deposits beyond 10 million tonnes, the reserve price is 25 percent. In case of the immense Gonua mine now held by big merchant player KJS Ahluwalia where the net estimated deposits are in excess of 700 million tonnes, the reserve price is staggering at 50 percent, a source in the know confirmed. For all manganese ore mines, the bid price is uniform at 15 percent.

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