Karnataka is planning to club 7 iron ore mines that have failed to generate adequate response from the private sector in the ongoing mines auction and is likely to approach the Supreme Court for approval.
The second phase of mines auction kicked off on a mixed note with 10 firms including NMDC, JSW Steel and Vedanta vying for 7 mines out of the total 14 as the rest did not find favour with industry.
Firms say lower quantity of reserves and low quality of iron ore coupled with other factors impact the economic viability of these mines, a government official said.
“Karnataka government is now working on clubbing these mines so that they become viable for the companies, especially for pig iron and pellet makers. The state will have to approach the Supreme Court for this as these 14 mines are the same ones that were allowed for auction,” the official said.
On the timeframe, he said it is also being discussed with the Union Mines Ministry and after that the state government will decide when to approach the apex court.
In July 2015, Supreme Court directed Karnataka government to commence the auction ‘C’ category iron ore mines in which end-user firms dealing in steel, sponge iron or pelletisation only would be able to take part.
The state government had in September 2013 cancelled 51 ‘C’ category mining leases following an apex court order.
Karnataka has offered a total of 14 ‘C’ category iron ore mines, which have average Fe content in the range of 40 to 59 per cent. The eAuction is slated for the first and second week of October. The total estimated iron ore reserve is close to 200 million tonnes (MT).
Ten companies including state-run iron ore miner NMDC, Sajjan Jindal-Led JSW Steel and billionaire Anil Agrawal-led Vedanta Ltd have shown interest in 7 mines, which have a total estimated reserve of around 140 MT.
The rest did not get adequate bids as the firms felt that low reserves does not make it viable from them to bid. Another issue was their distance from production facilities, he added.
Only exception in these 7 rejected mines is the Nidhi Mining block, which has a little over 10 MT of reserves and has an average Fe content of more than 58 per cent.
According to the government data, domestic production of iron ore was 169 MT in 2011-12 and 137 MT in 2012-13 as against consumption of 101 MT and 103 MT.
In 2015-16, the country mined about 155 MT of the ore as against 129 MT in the preceding year.