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Steel companies urge govt to auction iron ore mining leases expiring in March

Jun 4,2019

Govt could lose Rs 79,500 crore if lease on 53 million tonnes capacity is not auctioned; they caution, Steel companies have urged the government not to extend the merchant iron ore mining leases that are expiring next March, as it could lead to a revenue loss of Rs 80,000 crore to the exchequer.


In a letter to Prime Minister Narendra Modi and the Niti Aayog representing steel companies, the Assocham, Indian Merchants Chamber, Chhattisgarh Sponge Iron Manufacturers’ Association and the Karnataka Iron and Steel Manufacturers’ Association, said the government would lose about Rs 79,500 crore revenue if the lease on 53 million tonnes of iron ore capacity that is expiring next March is not auctioned.


These operational mines should be auctioned immediately to ensure that there is no major supply disruption, they said. The major companies represented by the associations include JSW Steel, Tata Steel, Jindal Steel and Power, Welspun Steel, Jindal Saw, MESCO and Shyam Steels.


Auctioning of mineral concessions would improve transparency in allocation and increase revenue, it said. According to the report published by the Government Committee, leases on 334 mines (49 operational and 245 non-operational) expire in March 2020. Of this, leases on 33 operational iron ore mines with an annual production capacity of 55 mt and 16 working iron ore mines in Odisha expire next March.


Instead of extending these mining leases, a smooth auction and transition from the old lessees to new lessees should be done in a transparent manner, as in the case of coal blocks done five years back, the associations said.


In order to provide a level playing field between captive and merchant miners, it is crucial that fresh auction of the iron ore mines is conducted and both are allowed to participate in the auction, considering that a majority of iron mines allotted belong to merchant miners, it said.


The government needs to amend Section 8A (4) of the MMDR Act that allows auctioning of mines only on expiry of the lease period.


In May, the Federation of Indian Mineral Industries had pitched for an immediate extension of leases of over 300 non-captive mines until March 2030, expressing the fear that the sector may face a crisis-like situation following the expiry of licenses of these mines.


In a presentation before a high-level committee of the Niti Aayog, it said the mining industry is facing a crisis following the amendment to the MMDR Act in January 2015 that provided for auction as the sole mode of granting concessions for a fixed period of 50 years to private companies - captive and non-captive.