Karnataka cancels mines e-auction, to invite fresh bids

By: | Updated: December 23, 2015 12:15 AM

At the pre-bid meeting, some bidders had raised objections regarding the forest and environment clearances for the mines, and also the lack of clarity on the quantity of iron ore to be produced by the successful bidders

The Karnataka government has cancelled the invitation of bids for grant of ‘C’ category iron ore mining leases through e-auction. The government intends to invite fresh bids after modifying the tender documents. Though the government has not cited any reasons for the cancellation of auction process, it is learnt that some bidders had raised certain objections during the pre-bid meeting held on December 14. The department of mines and geology, Karnataka, issued a notice on Tuesday informing all the bidders about the cancellation.

“Those potential bidders who have purchased the mine-specific tender document on payment of requisite price, as stipulated in the notice inviting tender, will be refunded by MSTC through RTGS,” the department said in its notice. With this, the process of allotting C category mines is likely to be delayed further. This is the first time in the country that natural resources are being allotted through e-auction.

The department, earlier, had fixed R5 lakh per document as fee and it will be refunded to all bidders. According to sources close to the tender process, the department has decided to reduce the document fee to Rs 2 lakh per bid. It has also decided to increase the number of mines that will be auctioned to 14 from the 11 planned earlier. At the pre-bid meeting, some bidders had raised objections regarding the forest clearance and environment clearance for the mines that are put under the block, and also the lack of clarity on the quantity of iron ore to be produced by the successful bidders in the mines. Currently, the Supreme Court has put a cap on production of iron ore at 25 million tonne per annum (mtpa) in Ballari and 5 mtpa in Chitradurga and Tumkur.

“We asked the department as to what quantity will be allowed to be produced in the C category mines. But the officials had no clarity on it. Also, they were not sure on the forest and environment clearance for those mines,” a bidder who participated in the pre-bid meeting told FE.

Earlier, the department of mines and geology had invited bids on November 30, 2015 from end users for the e-auction of 11 mines under the C category, following directions from the Supreme Court. The court had allowed the state government to auction 15 out of 51 C category leases in Ballari and Chitradurga districts. These 11 mines together possess around 127 million tonne (MT) of iron ore reserves.

The apex court, in its final order on illegal mining in Karnataka pronounced in April 2013, had directed the state government to cancel 51 C category leases for involving in rampant illegal mining and re-allot them to end-users through a transparent bidding mechanism. The state-owned MSTC Limited will conduct electronic auction for allotment of these mines to end users.

Currently, 24 mining leases are producing an average 21 MT of iron ore in the state of Karnataka while the requirement of iron ore by steel mills in and around the state is estimated at 35 MT. This includes two mining leases of state-owned NMDC.

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