Changing Times For Iron Ore Industry In Odisha

A lot of news flow around Iron ore mines auction in Odisha relates back to malaise of the period, 2006-2011, characterized by rampant illegal mining activities being carried out by the several iron ore miners in the key states of Odisha, Goa and Karnataka. Policy inactions by the government that time encouraged these miners to cross all limits of violations of production, mining leases renewals, environmental norms, transportation etc. Miners made exorbitant money during this period, causing a huge loss to the national kitty. It was during this time that Shah Commission was appointed to probe into the illegality of the mining activities of the miners and report to the government for corrective action. The extent of non-compliances and irregularity was such that Shah Commission tenure had to be extended by 1 year until July 2013.

Shah Commission’s findings were rattling as it revealed a nexus between the miners, mining department, state ministry and others which caused significant loss to the government. There were instances of mines being operated under deemed renewal concept which means that on expiry of licences, the miner can make an application for renewal which is considered as renewal. Shah Commission strongly recommended regularization of all mines and auction of all the mines going forward which would benefit the government substantially. However, this had to be done in a very organized way which would not impact the working of the steel and various other industries. In the year 2015, after analyzing Shah Commission report, all the mines which were operating under deemed renewal were validly extended until Mar 2020 and March 2030 for merchant miners and captive mines respectively. These mines would be auctioned on completion of this period.

It was expected that there would be a huge disruption in the interim period in supply of iron ore when these operating mines would be opened for auctions in 2020. Commendably, state government and central government has taken various proactive steps during the last quarter to mitigate the supply disruptions. Notable steps include:

i. Government of Odisha has permitted the existing iron ore miners to transport and store their existing stock at a stockyard which can then be sold by the miner within a period of 24 months i.e until March 2022. This will ensure that, though the mines are changing hands, the iron ore supply will continue in the market.

ii. Central government on Jan 10, 2020 issued. The Mineral Laws (Amendment) Ordinance, 2020 which made it clear that the incoming mine owner can continue with mining operations without obtaining any clearances for 2 years. The incoming mine owner gets enough time of 2 years to obtain all the statutory clearances, including those related to the environment. This amendment is big relief to the industry which would ensure steady supply of iron ore in the market.

iii. The government also allowed state-run, Steel Authority of India, to sell 25 per cent of iron ore produced from its captive mines – it was not allowed to do so earlier – as also dispose old stock of about 162 million tonnes of low-grade ore lying at its pitheads across the country.

The above initiatives will facilitate smooth transition of mining activity from the old to new mine owners without disrupting the supply in the market. Also, with hope that government would receive fair remuneration from country’s natural resources for it to recycle funds for the benefit of the its citizens welfare.