Mineral auctions fetch Rs73,300 crore to states

New Delhi: Companies like Essar Steel India Ltd, JSW Ltd, Maithan Ispat Ltd, and Shree Cement Ltd, will pay seven mineral-rich states about Rs73,300 crore for extracting limestone, iron ore, diamond and gold for the mining leases they won in 21 rounds of auctions recently.

With mining output rebounding in November after a three-month contraction since August and iron ore exports picking up, 15 more iron ore mines in Karnataka are set to go under the hammer before March, said an official in the mines ministry, who asked not to be named.

Sluggish commodity prices had initially held back momentum in the auctioning of mining leases after the January 2015 amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957, but it is gathering pace now. Another 150-200 mines across minerals will be put up for auction in 2017-18.

The law was amended to replace the administrative allocation of mining leases with auctions.

Rajasthan, Odisha, Karnataka, Madhya Pradesh, Andhra Pradesh, Chhattisgarh and Jharkhand auctioned mining leases for limestone, iron ore, diamond, and gold in 21 rounds this financial year and would receive revenue from miners during the life of the mining lease, which usually is 50 years.

Among the other companies that secured mines this fiscal are Dalmia Cements (Bharat) Ltd, MSPL Ltd, Vedanta Ltd, Burnpur Cement Ltd and Bansal Construction Works Pvt Ltd, according to data from the mines ministry.

The idea is to add more areas under mineral exploration with a goal to raise the sector’s share in the country’s economic output by one percentage point from 2.4% now—a target set by the Union mines minister Piyush Goyal when he took charge of the ministry in July.

Production of iron ore, the third-largest solid mineral produced in the country after coal and limestone, jumped 22% in April-October period to 100 million tonnes from a year ago, while exports have jumped nine-fold to nine million tonnes in the April-September period, from one million tonne a year ago.

Firm iron ore price in global markets—$70 a tonne—in recent months and the steps taken to protect the primary steel industry from cheap imports of steel helped iron ore miners.

According to Anjani Agarwal, mining & metals sector leader, EY, if global iron ore prices remain firm, it is good for the domestic merchant iron ore mining industry. India needs about 150 million tonnes of iron ore at current production of steel, said Agarwal.