Mining Auction: Odisha Merchant Miners to Get Storage Licenses

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The Odisha government has provisioned for intermediate storage of minerals like iron ore, manganese ore and chromite ore produced by merchant miners. Like end use industries, the merchant miners have got the permits of the state steel & mines department to stash ore in storage depots or stockyards.

The merchant miners will be endowed with storage licenses whose validity is till March 31, 2022. The facility of storage licenses has been provided to the non-captive or merchant miners keeping in view the fact that their lease validity ceases by March 31, 2020. Odisha has 16 operative merchant miners who lease tenure ends by that period as per the provisions contained in the amended Mines and Minerals- Development & Regulation (MMDR) Act of 2015.

Iron ore
Iron ore

According to MMDR Act’s provisions, the merchant miners could move the ore for only six months after the expiry of the lease validity. Since Odisha boasts of 139 million tonnes of iron ore accumulated at the pit heads of mines, their liquidation within six months of the lease expiry seemed unfeasible. Moreover, the stockpile had a preponderance of baser grade iron ore fines for which there were hardly any takers in the domestic steel market. Cost efficient steel companies opted for higher grade iron ore to keep their steel making costs competitive. Moreover, apart from the lukewarm domestic demand, the exports of lower grade ore up to 60 per cent iron ore fines attracted steep export tax of 30 per cent, rendering the Indian material uncompetitive in international seaborne trade.

Hence, the state by invoking powers vested under Rule 10 B of Odisha Minerals (Prevention of Theft, Smuggling and Illegal Mining and Regulation of Possession, Storage, Trading & Transportation) Rules 2007 has allowed the establishment of intermediate storage depots (stock-yards) by the merchant mine leaseholders.

All approvals and clearances required for setting up and upkeep of the storage depots will be obtained by the merchant miners.

The grant of storage licenses for the merchant miners was warranted by the huge inventory of minerals within lease area. The disposal and sale of this stockpile was needed to facilitate smooth transition of ownership of mines and also to avert any obstruction in their production after take over by the new bidders following auctions.

Odisha has enlisted 20 lapsing merchant mines for auctions. It has already issued the Notice Inviting Tenders (NITs) and model tender documents in respect of five iron and manganese ore blocks on October 4. Auctions for the rest 10 blocks are scheduled to be notified on October 14. Five out of the 20 merchant blocks headed for expiry are reserved for steel and other end use industries. The balances 15 blocks are meant for bidding by merchant miners.