KOLKATA (miningweekly.com) – Uncertainty over the maximum permissible area that can be granted for mining is undermining plans to hold fresh rounds of mineral block auctions in the eastern Indian state of Odisha.
The Odisha government is currently working to complete rounds of auction to allocate 16 mineral blocks in the state, including ten iron-ore blocks, before the end of the current financial year.
However, the federal Mines Ministry is yet to make a decision on a submission from the Odisha government that the maximum permissible mining area for a mineral block allocated through auction be increased from 10 km2 to 75 km2.
The Odisha government has claimed that indecision by the Mines Ministry, despite several reminders to increase permissible maximum mining area, is affecting the readiness of the state government to hold the auctions before the March 31, 2019 deadline.
State government officials say that in the absence of a clear directive from the Mines Ministry on the issue, any further auction to allocate mineral blocks will risk legal challenge and such risks could also impact the response from prospective bidders.
Earlier this year a court stayed the results of a round of auction maintaining that the central government needed to come out with a decision on maximum permissible area for mining in response to the state government’s request seeking the extension of the maximum permissible mining limit.
Auction results of two iron-ore blocks were stayed by the courts until such time as the central government came out with a definite decision on the issue.
The Mines, Minerals Development and Regulation Act 2015 stipulated that maximum mining rights for a mineral block secured through auction would be 10 km. Should any state want an extension of such permissible limits, the government will have to seek approval of the federal Mines Ministry, which could grant extensions on a case-by-case basis.
The Odisha government maintains that unless the permissible mining area limit is increased, the proposed auction will not be able to attract interest from large mining or metal processing companies. The government has cited the examples of Tata Steel and Steel Authority of India Limited, which already operates mines in the state with a combined lease area of more than 50 km2.