On 20th of April, Odisha government issued a letter of intent to develop the Ghorhaburhani-Sagasahi iron ore block – the only iron ore block auctioned so far by Odisha government which has garnered INR 113 billion, the highest amount any state government has earned from a mineral block auction.Though the Odisha government seems satisfied with the success of the auction, it is facing several hurdles in finalizing more mineral blocks for auction. Not only Odisha, all major mineral bearing states have been facing difficulties to auction blocks in a stipulated time owing to several reasons such as lack of mineral bearing blocks with G2 exploration level, weak market conditions etc.
In the Central Coordination cum Empowered Committee (CCEC) meeting held in the first week of April in New Delhi, the union mines secretary Balwinder Kumar expressed his dissatisfaction over the tepid progress of the mineral block auction.Only 6 blocks have been auctioned by 3 states so far. He asked the states to submit the status of phase-2 and phase-3 auctions. According to the submission by the state governments, as many as 82 mineral blocks have been identified to be auctioned in phase-2 (in 2016-17) and 35 blocks will be auctioned in the phase-3 (in2017-18).
However, the states are finding it difficult to put these blocks up for auction as very few blocks have G2 level exploration status (as per the UNFC norms). A mineral block with G2 level of exploration has better clarity on the quantity of mineral reserve in the block,which makes it easy for the government to decide base price and set norms for auction. Such blocks are put up in the auctions for Mining Licenses (ML). In case of G3 level of blocks, there is less clarity on the mineral reserve in the block. In such cases, the government auctions the blocks as Composite License (CL) ie prospecting license cum mining lease. In a CL, the lease holder of a mineral block would have to carry out the exploration process before commercial mining.
The Geological Survey of India (GSI) and Mineral Exploration Corporation of India(MECL), the Government of India owned mineral exploration agencies are currently assigned to upgrade exploration status of several blocks from G3 to G2 level. But given the limited resources and infrastructure, the agencies are struggling to finish the assignment in time. On the other hand, the union mines ministry has turned down the requests from states on the issue of allowing auction of G3 blocks.
In the CCEC meeting, Odisha informed that it is ready to auction 12 blocks including 6 iron ore blocks by September this year. The exploration work of upgrading 13 blocks from G3evel to G2 level has been assigned to GSI (5), MECL (2) and State Directorate of Mining and Geology (5). State government has once again requested the ministry to allow 7 blocks of G3 level for auction of CL.
Earlier, in November last year,Odisha government had also requested the central mines ministry to allow 7 mineral blocks at G3 exploration stage for auctions for issue of CL. The ministry, however, had allowed only 2 blocks which were explored up to the G2 level and hence, auction ready.
Not only exploration, other mineral rich state governments have raised several other issues coming on the way of the auction. While Maharashtra has said that some of its blocks are coming under the Western Ghat Eco Sensitive Zone, Goa said that there was no scope for more iron ore blocks to be put for auction and requested mines ministry to approach Supreme Court for relaxing the cap on production of the ore.
Similarly, Gujarat has attributed low participation of bidders to long distance of limestone mine from market/plant and restriction on use of limestone for captive purpose only.
On the other hand, the mineral based industry body FIMI has attributed the weak response for mining auction to the weak global commodity prices and overall slowdown in global economy.