Govt plans to end iron ore leases of mines that didn’t start output

The Mines Ministry proposed to do so through the amendment of certain mining rules and has invited comments from the stakeholders on the same

By   |  Published: 17th Jan 2021  8:06 pm

New Delhi: The Mines Ministry has made a proposal to terminate the iron ore leases of those working mines that have not started production even after lapse of 7-8 months of auction and have not maintained minimum dispatch for three consecutive quarters. The Mines Ministry proposed to do so through the amendment of certain mining rules and has invited comments from the stakeholders on the same.

“The Ministry of Mines has prepared the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession (Amendment) Rules, 2021, seeking to amend the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016,” the Mines Ministry said. It added that as part of the pre-legislative consultation policy, the draft amendment rules are made available. “Comments/suggestions are invited from the general public, governments of States and Union Territories, mining industry, stake holders, industry associations, and other persons and entities concerned, on the draft amendment rules.”

Several successful bidders of such working mines whose previous mining leases expired on March 31, 2020, have not started production even after lapse of 7-8 months of auction and execution of mining leases in their favour. Further, many of the successful bidders who have started production have not maintained the production and dispatch quantity up to the level required under Rule 12A of the MCR, the Ministry said.

“Accordingly, it is proposed to strengthen the norms of minimum production/dispatch through amendment of Rule 12A of the MCR Rules, 1960, in order to ensure sustained supply of mineral in the market in future,” the Ministry said. It added that the Rule 12A is proposed to be amended to mandate the successful bidder to make payment equivalent to the revenue share and other statutory levies that would have been payable at the prescribed level of minimum production/ dispatch targets on a quarterly basis.

NMDC sets 100 MT iron ore production target by 2030

State-owned NMDC aims to utilise 97 per cent of its production capacity to produce 35 million tonne (MT) of Iron ore this fiscal and has set an ambitious target of producing 100 MT by 2030, in a bid to ensure a continuous and smooth supply of the mineral for steel makers, according to a senior official. By the targeted year 2030, the government also aims to increase India’s total steel making capacity to 300 MT. Iron ore is the main ingredient used for producing the metal besides coking coal.

“In the ongoing financial year, NMDC has targeted to utilise 97 per cent of its production capacity to produce 35 MT of Iron ore. Going forward, NMDC has a target of achieving 50 MT production capacity by 2023, and 100 MT by 2030,” P K Satpathy, NMDC director, production, said.

He said while the country’s overall production reported a sharp fall of 27.5 per cent at 110.5 MT in April-November of ongoing fiscal, from 152.3 MT in year ago period, National Mineral Development Corporation (NMDC) produced 18 MT during the period under review, against 18.9 MT and April-November of FY 2019-20, registering a decline of just 4.7 per cent.

On the supply and price of iron ore, the official said the prices of the mineral are soaring globally. The values for 62Fe (ore with 62 per cent iron content) reached approximately at $172 per tonne by the middle of December. This level was last recorded in early 2013. Demand growth, particularly in China, is driving the increase in international cost of the raw material. The effect of the same is being felt in the domestic market as well, he said. “However, a closer look into the industry prices show, NMDC’s iron ore prices are still at a discount of 30-40 per cent than the imported iron ore price and 20-25 per cent lesser than the domestic iron ore suppliers,” he said.

Satpathy noted that supply normalcy is yet to be achieved and the sharp shortages in India and abroad is aiding the iron ore rally. Higher demand for finished products like steel and the disruption in Odisha have also resulted in high iron ore prices. Aggravating the situation is the problem of non-operationalisation of merchant mines in India, he said. He said a disruption in supply of iron ore in the current financial year is owing to the expiry of 49 merchant iron ore mines of which 34 were operational on March 31, 2020. Of these, 17 are operational mines in Odisha and contributed to about 25 per cent of the total domestic production.