Merchant mines in Odisha may reopen next month as local govt issues orders


Photo courtesy - Glencore

Merchant mines in Odisha are set to recommence operations towards the middle of next month. The local government here has issued vesting orders necessary to restart mining activity at the leases. Captive mines for thermal power, steel and other projects who are now allowed to sell excess coal from their captive mines in open market are known as merchant miners.

Before the expiry of their leases on March 31 this year, the Odisha government had held online auctions of 24 merchant blocks containing deposits of iron ore, manganese and chromite. To facilitate seamless change in ownership and continuity in mining operations, the Centre had extended the validity of all statutory approvals, including critical ones like environment and forestry clearances by two years.

However, the onset and rapid spread of Covid-19 pandemic queered the pitch for the smooth run of mining operations. As Odisha pioneered the announcement and enforcement of lockdown, most administrative departments barring those dealing with essential services faced shutdown. The lockdown to contain the viral contagion delayed paperwork needed to grant formal approvals to keep the mines running again.

Online auctions of lapsing merchant blocks in Odisha had generated frenetic bidding interest. Average premiums at auctions climbed to 104 per cent. Most of the incumbent leaseholders –  Essel Mining & Industries Ltd and Rungta Mines – lost their prized mines as aggressive bidders placed big bets to bag the coveted resources.

Sajjan Jindal led JSW Steel emerged as the key disruptor at online auctions, winning four iron ore mines. ArcelorMittal and Jindal Steel & Power Ltd (JSPL) secured one block each. Among existing lessees, Serajuddin & Company and Tata Steel managed to hold on to their iron ore and chromite leases respectively amid intense competitive bidding.

The buoyancy in international prices had triggered concerns on a possible hike in domestic iron ore prices which have been subdued on a muted demand from the steel industry. NMDC, the country’s largest commercial iron ore miner, had gone for back to back price cuts for both iron ore lumps and fines in April and May as demand petered out.

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