The Indian iron ore industry is expected to undergo a turnaround in 2019-2020. MMDR Amendment Act, 2015 has laid out the guidelines for lease extension of non-captive mines till 31 Mar’2020 following which the leases shall be put up for auction for competitive bidding.
Why is the industry apprehensive about mine auctions?
Odisha – India’s largest iron ore producing state which also accounts for nearly 50% of share in country’s iron ore production is expected to be impacted the most. According to SteelMint, combined EC (Environmental Clearance) limit of 75-80 MnT pa will be at stake which is currently under possession of merchant miners. Notably Odisha is the key raw material supplier to major pellet, sponge & steel makers in eastern and central India.
“We have made significant strides in making our lapsable blocks ready for auctions. 25 of the 29 operative iron ore mines will be fully geared up for auctions by March 2019. We are keeping the mines ministry informed on the steps being taken and awaiting their directions to prepare the ground for auctions”, said an Odisha government source.
Few major Odisha iron ore mining leases due to expire in 31 Mar’2020
EC Limit (in MnT pa)
|Iron ore production in 2018 (in MnT)|
|Feegrade and Company Pvt. Ltd.||Nadidih||7.45|
|Rungta Mines Ltd.||Jajang||16.5|
|Serajuddin and Co.||Balda||15.15|
|Kalinga Mining Corporation||Khanbandh|
|Aryan Mining & trading Corporation Ltd.||Koira|
|Essel Mining & Industries Ltd.||Jilling|
Source: SteelMint, Odisha Govt.
“Mining leases have to be explored upto the level of G2 and Geological report needs to be submitted to the committee which will then scrutinize and take further action to decide as & when the lease will be put up for auction. The mining leases which are going to expire in 31 Mar’2020 have been given deadline of 31 Mar’19 to achieve G2 level of exploration. So far 6 running iron ore mining leases have submitted the Geological report with exploration completed till G2 level.”, shared a senior official from Department of Mines, Govt. of Odisha.
What is G2 level of exploration?
The exploration for any mineral deposit involves four stages: Reconnaissance survey (G4), Prospecting (G3), General exploration (G2) and Detailed exploration (G1). Each stage generate resource data with a clearly defined degrees of geological assurance. G2-level exploration’s objective is to establish the main geological features of a deposit and provide an initial estimate of size, shape, structure and grade of the mineral in the mine.
Two central government agencies- Geological Survey of India (GSI) and Mineral Exploration Corporation of India (MECL) are tasked with mineral exploratory work.
So it’s big question in the development of the auction process whether the government will be able to complete the procedures well before time or it will lead to supply disruption in domestic market ?
Will Indian iron ore import volumes surge further?
According to data maintained with SteelMint, iron ore import volumes to India increased drastically from 5.5 MnT in CY17 to 15.66 MnT in CY18. The import volumes reported in CY18 are highest so far. High discounts on global ore, intermittent suspension of iron ore supplies from few major Odisha mines amid lease expiry issues resulted in increased imports.
Will block auctions bring some disruption to domestic supply and force more imports to the country?
To know more book your seat at 3rd Indian Iron Ore & Pellet Summit to be held on 18-19 Feb 2019 at the Leela Ambience, Delhi NCR.