Having promulgated the Mines and Minerals (Development and regulation) (Amendment) Ordinance 2014 which entails auction of mining leases, Mines Minister Narendra Singh Tomar said on Monday that all mining leases will be given away through the bidding route. He also made it clear that South Korean steel giant POSCO, too, will have to follow suit, which clearly means that its jinxed mega steel plant project in Odisha will face further delays.
The promulgation of the ordinance has come as a setback for POSCO, which for long has been seeking the permission to mine Kandadhar iron ore reserves for its upcoming 8 million tonnes mega steel plant in Odisha. like other companies, it too will now have to participate in the auction in order to seek the lease for the aforementioned reserve.
This means that the much delayed POSCO project, may be relegated to the back burner, as according to sources privy to the development, the auction process is likely to begin only after exploration of all the 199 mines (which the Centre has identified for the auction process) is completed. This, they added, is going to take around three to four years.
Tomar, who was speaking to media persons after a day-long conference held with the mining ministers of all mineral-rich states, however, claimed that all the 199 mines will be put up for auction soon. He said that the modalities for the auction have already begun and the ministry aims to start the process as soon as possible.
Asked about POSCO seeking the Kandadhar iron ore reserve, Tomar said that like others, it, too, will have to bid in order to seek the said mining lease. All mines would be allocated through auction route only and there would not be any allocation through the dispensation route. “How come the two routes co-existIJ ... We need to choose between the two. Ordinance will bring transparency,” he said.
Mines Secretary Anup Pujari though offered a slightly different take on the matter. While stating that from now on all mines would be allocated through the auction route only, but in cases where the Centre has given concurrence or the States have conveyed “letter of intent by whatever name it is called” to allottees, seamless transaction can happen in those cases.
POSCO had signed a MoU with the Odisha Government, whether it has a letter of intent is not clear. This slight change in approach could have emerged owing to pressure from the states which were present during the meeting, sources said. According to sources, Odisha’s Minister of State for Steel and Mines Prafulla Kumar Mallik is learnt to have expressed displeasure over the prospects of POSCO’s steel plant getting further delayed due to the auction process. The State Government is learnt to have indicated that it may oppose the ordinance when it will come up in Parliament next month, sources added.
later while speaking to reporters, Mallik said, “these commitments (on POSCO) should be honoured under the new dispensation (Ordinance). POSCO was the largest proposed FDI project in the country for which the Government of India has made an international commitment. The nation will be sending a very wrong signal to the international investor community by completely ignoring these international commitments for supporting the raw material requirement of the project.”
The 199 mines identified by the Government for the proposed auction, contain minerals such as iron ore, bauxite and manganese ore. These mines are located in the mineral-rich states such as Karnataka, Madhya Pradesh, Odisha, Gujarat and Maharashtra, said Tomar.