Nearly a third of iron ore supplies to domestic steel mills could be disrupted if the auction of 33 mines whose leases are slated to expire in March next year are not held in time.
These mines contribute about 28 percent of the country’s total production of iron ore, a key raw material used in steelmaking, according to a report by the Ministry of Mines. The majority of these are located in Odisha (16 licences set to expire), followed by Karnataka (eight) and Jharkhand (five).
Among the 16 working licences of India’s largest iron-ore producing state of Odisha, Serajuddin and Rungta mines produced 6 million tonnes and 11 million tonnes, respectively, last year, a report by SteelMint said. Overall, these two miners have 2.9 percent and 11.65 percent share, respectively, of India’s total iron ore market, it said.
The Odisha government was set to auction the 16 mines by March this year but deferred the timeline as the state awaits clarity on the maximum area a lessee can hold, according to a Business Standard report. But the bigger worry is that the new lessee has to apply afresh for environment and forest clearance after the re-allocation of an expired mine. This process could take two to three years before the mine can be made operational.
To avoid the potential disruption, the central government advised the states to start auctions by July 1 this year so that the incoming miner has enough time to make the mine functional, according to the Ministry of Mines report.