Mines auction can trigger Odisha’s trillion-dollar dream

| | BHUBANESWAR
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Mines auction can trigger Odisha’s trillion-dollar dream

Monday, 05 July 2021 | SAROJ MISHRA | BHUBANESWAR

Mineral wealth is a blessing if measures are taken to transform it into a sustainable development. Odisha has shown to the rest of the country as to how a transparent auctioning process can not only trigger growth and development but can also herald in huge revenue inflows for the State. The State has already triggered the process of auctioning and in 2020 witnessed aggressive participation by 86 companies resulting in successful auction of 17 mines. Moreover, these auctions witnessed high premiums and have even gone up to 154 per cent of the reserve price which proved to be a bonanza for the State. 

The table below illustrates the effect of unlocking this wealth through auctions to the exchequer of the State Government.  Arcellor Mittal Nippon Steel and JSW Steel have reported desptach of 21 million tonne with a contribution of about `12,0005 crore to the Government exchequer during July-2020 to June-2021 by way of royalty and premium from auctioned mines despite initial hiccups in fully operationalise the mines. Practically mines were hardly operational for six months in the first year since commencement. On the other hand the non-auctioned mines such as Tata Steel ( three mines), SAIL( four mines), Rungta (two mines), Essel (one mine) contributed `6,189 crores to the State exchequer by dispatching 56 million tonnes during the  period. This is just the contribution of two corporates and if you extrapolate the figures for the entire State then one can only imagine the quantum of economic growth the State is looking at. Contribution to State Ex-exchequer by auctioned and non-auctioned mines in Odisha: In the first quarter of 2021 the revenue collection would be above `9,049 crore, up from `2,735 crore generated in the corresponding period of the previous fiscal. It needs to be underlined here that this spike is achieved despite Covid headwinds and only 16 blocks of auctioned mines starting their production activities.

In future, if approximately 250 MT of iron ore in the State is put to auction with an average price of `3, 000 per tonne and calculation be done with average auction premium of 75per cent, Odisha would generate revenue of around ` 56,250 crores annually.

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