Odisha government bows to pressure? Mine blocks up for auction despite anticipated market slump

After a long wait of over two years for a bullish metal market, added with a recent push from the central government, the government of Odisha has given in on the approval of the proposal of the Steel and Mines department for the auction of 10 mineral blocks in the state.

Among the ten blocks, the state government has nodded on the auction of four iron ore mines - Koira in Sundargarh district, and Roida-1, Putulipani and Jalahuri in Keonjhar district. These mine blocks lost their leasing tenure in 2021. Apart from these, a virgin mine, the Jhumka-Pathiriposhi West iron ore block in Sundargarh is put up for auction this time. The auction is also to feature two virgin bauxite blocks at Karlapat in the Kalahandi district and Nunapaimali in the Rayagada district.

“The decision to go for auction of 10 mineral blocks including two virgin bauxite mines in a not so conducive market situation is most possibly driven by pressure from the Union Mines minister G Kishan Reddy, who during his recent visit took up the issue with Chief Minister Mohan Charan Majhi,” said sources in the mining industry.

Three other blocks comprising a mix of deposits of iron ore and manganese located at Orahuri, Bhanjikususm in Sundargarh, and Roida-D in Keonjhar district are on the auction list. Even after more than seven months of coming to power, the state government has been reluctant to take a call on the e-auction of mines, fearing a lack of response from bidders due to the current low metal prices, as it would lead to significantly lower revenue earnings for the state, shares a leading national media.

“It is not only Odisha, but most of the mineral-bearing states are reluctant to go for auction fearing abnormally low bids which could lead to long-term revenue loss. The state government sets floor prices for auctions based on its perception of the fair value of the mine. The bidders’ perception of the fair value of the mine could be lower than the government,” the sources added.

Since amendments to the Mines and Minerals (Development and Regulation) Act in 2015, the auction regime has greatly increased the state's mining revenue, making it ten times higher than a decade ago.

Citing the example of the Kasia iron ore and dolomite block in Keonjhar district, sources said Jindal Steel and Power Ltd (JSPL) secured the block by offering a premium of 118.1 per cent over the floor price of 95.6 per cent. JSPL had also offered the highest premium of 144 per cent for the Guali iron ore block but later declined to execute the lease deed.