The Odisha government is looking to relax production targets for merchant mines that are gearing up to recommence operations after online auctions.
At the time of online auctions, Rules mandated that the new leaseholders need to produce at least 80 per cent of the average output achieved by the previous lessee. This clause was designed to ensure the new mine owners achieved production at an optimal level and no artificial shortage of ore is created.
However, the outbreak and rampant spread of Covid-19 pandemic have played spoilsport to seamless operations of the merchant owned blocks. Resumption of mining activity has been delayed as the government paperwork and formalities consumed time in view of the lockdown imposed to check the spread of the pandemic.
“We are going to ease the production targets initially set for the auctioned merchant blocks. But miners have already lost nearly four months of their production schedule since April this year. The revised production terms will be commensurate with the time lapsed in restarting mines”, said an Odisha government official.
The Odisha mines department had auctioned 24 merchant blocks endowed with deposits of iron ore, manganese and chrome ore. The lease validity of all these non-captive blocks ceased on March 31, 2020, as per the revised Mines and Minerals- Development & Regulation (MMDR) Act, 2015.
Seventeen (17) out of the 24 blocks have already inked mining lease deeds while a few amongst them have begun trial production.
Online auctions of merchant blocks in Odisha had evoked a resounding response. The average bids for the blocks stood at 104 per cent. While Tata Steel retained its Sukinda chromite lease, its fully owned subsidiary TS Alloys (now Tata Steel Mining Ltd) emerged as the successful bidder for three chromite resources- Sukinda, Saruabil and Kamarda.
Almost all the iron ore leases barring one held by Serajuddin will change hands. Sajjan Jindal led JSW Steel had turned out to be the key disruptor at electronic auctions in Odisha, bagging four mines with aggressive price bids. Global steel behemoth ArcelorMittal won the Thakurani mine formerly held by Kaypee Enterprises.
The reopening of the merchant mine blocks is also expected to shore up revenues for the state government. During April-May, the state has barely been able to garner around Rs 700 crore of mining revenue as collections have tanked considerably after the Covid outbreak. In FY20, Odisha collected mining revenue in upwards of Rs 10,000 crore.
Article Written By Dibyajit Sahu
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