TS Alloys, a Tata Steel subsidiary, has emerged as the highest bidder for the Saruabil chrome deposit in Odisha, currently held by Misrilall Mine Ltd with a bid of 88.5 percent of the sale value of the mineral. Late on Wednesday night it also won the much smaller Kamarda deposit held by BC Mohanty and Sons with a bid of 96.8 percent according to those in the know.
The current leases come to an end on March 31, 2020, along with Tata Steel’s own Sukinda chrome mine. This is the first of the working mines lapsing in 2020 to be successfully auctioned by Naveen Patnaik's government which has more than 20 iron ore mines similarly lapsing in March in the pipeline. The higher the bids the more the state government stands to earn (aside from royalty and taxes) provided the mine is operationalized.
The aggressive bidding for the chrome deposits has surprised some in the industry despite the fact that the Saruabil mine was considered a prized asset for its superior geological properties. With a bid of 88.5 per cent (or 96.8 per cent for Kamarda) however, TS Alloys is essentially committing to pay the state more than what it would earn from selling chrome in the market once its paid royalty (15 percent), its contributions to district mineral fund and National Mineral Exploration Trust (another percent) and other taxes.
Twelve companies were in the fray with six making it to the second stage of the auction for Misrlall, this includes Jindal Stainless believed to be the second-highest bidder.
Chrome is used in the making of ferrochrome which in turn is used to make stainless steel. While Tata Steel has ferroalloy plants in Bamnipal and Joda in Odisha, it has chosen to bid for this merchant mine under TS Alloys, a wholly-owned subsidiary. TS Alloys which is to be renamed Tata Steel Mining will be the arm for the steelmaker’s venture into commercial mining, said a company official asking not to be named. It runs a ferrochrome plant in Athagarh near Cuttack and also operates Tata Steel’s ferrochrome plant in Gopalpur. Tata Steel's spokesperson did not respond to request for comments.
As the highest bidder, TS Alloys has two years to get statutory clearances before it gets a grant and can start mining. The Narendra Modi government at the Centre is believed to be working on proposed amendments to the forest and environment laws to allow for a smoother transition of leases lapsing in March 2020.
Tata Steel has a long history and strong social capital in the chrome valley of Sukinda, home to 97 percent of India’s chrome reserves. It runs two schools and a hospital inside its colony. The Odisha government while putting Misrilall's and BC Mohanty's chrome mines up for auction has decided to reserve Tata Steel’s 406 hectare and 120-meter deep Sukinda mine for a state PSU as ET had reported in August.