Aggressive mine bidding raises eyebrows

| | BHUBANESWAR
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Aggressive mine bidding raises eyebrows

Sunday, 26 September 2021 | PNS | BHUBANESWAR

The State Government had invited notice for tender documents for 11 mines, including a bauxite mine, in July, 2021. The auction commenced from third week of September.

The aggressive bidding for the Gandalpada iron ore deposits in Keonjhar district seems to have surprised the industry. Gadalpada has attracted a premium of 141.25%, which raises a question of rationality. Gandalpada is a virgin mine which can be operated only after obtaining forest and environment clearances. 

The Tata Steel has been enjoying five iron leases in Odisha for almost 100 years holding more than 49 sqkm. The State Government extended these leases in 2015 free of cost, i.e., no premium would be paid by the company for fifteen years.

When the company is ready to pay 141% for a virgin mine, it can pay at least the same amount, if not more, for the working mines under their operation.

Assuming that the company pays 140% of premium and average IBM price at Rs 5,000/tonne for a combined mining capacity of 40 MTPA of five mines, the State exchequer is losing a premium of Rs 28,000 crore annually (40 MT x Rs. 5,000/t x 100%). In 15 years, the total loss to Government’s exchequer is Rs 4,20,000 crore.

Knowledgeable circles like Jana Adhikari Parishad president Bijay Parida are of the view that the State Government must consider imposing the premium on the captive mines which were granted extension as per the MMDR (Amendment) Act, 2015. The present bidding is an eye opener for all.

The question is why the company concerned cannot be asked to pay the premium on the existing leases. .

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