Millennium Post

Six months on, few takers for auction of mineral blocks

Six months after auction process was initiated for 43 mines across 12-mineral bearing states, only six blocks have managed to find buyers -- prompting the Centre to direct the states to put in "greater efforts". States had identified 43 mines bearing minerals such as iron ore, bauxite, gold and limestone for auction in the first phase. Only six mines have been auctioned, which will earn a revenue, including royalties, of Rs 18,146 crore.

At a high-level meeting of representatives from Centre and the states earlier this month, Union Mines Secretary Balvinder Kumar expressed his "dissatisfaction" on the slow pace with only six blocks having been auctioned by three states. At the Coordination-cum-Empowered Committee (CCEC) meeting, Kumar directed the states to put in "greater effort" on their part to ensure the success of the auctions.

The representatives from various states are believed to have said that land ownership, distance of the mine from production site and eco-sensitive zones in the vicinity of the mine were some of the issues that discouraged potential bidders from participating in the auctions. Andhra Pradesh had to extend the date of initial bids for six limestone blocks to April 30, 2016. "Out of the six blocks, only three blocks have received a total of seven applicants - three each for two blocks and one for a block. Land ownership was informed to be one of the major impediments for applicants in coming forward," the Andhra representative said at the CCEC meet.

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. Gujarat attributed the low participation by bidders to large distance of limestone mine from market/plant and restriction on use of limestone for captive purpose only. Karnataka said that the on-going auction process has been extended due to issues regarding the stamp duty and that it is holding discussions on amendment of the Stamp Duty Act.

Maharashtra has put the blame on some blocks being in the Western Ghats, an eco-sensitive zone. Industry body Federation of Indian Mineral Industries (FIMI) Secretary General R K Sharma said that the industry is passing through a "very rough" phase.

"With the slowdown in economy and meltdown in commodity (metal) prices globally, there is less enthusiasm among the prospective investors to go for bidding," he added. Jharkhand tried to auction its first gold mine earlier this year for which three firms, including mining giant Vedanta, had evinced interest, a senior government official said.

Later, the state shelved the auction and fresh tenders for two gold mines are now expected by the end of this month or in May. Industry wants the government to complete exploration of mines before auction so that bidders have access to information that can help them take an informed decision. The Mines Ministry has announced an Inter Ministerial Group (IMG) to expedite post-auction clearances and approvals to ensure that mines become operational at the earliest. 
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