Economy

Mines auction: Assocham seeks amendments in tender documents

PTI New Delhi | Updated on February 25, 2019

Industry body says some bidders indulging in hoarding, accumulating resources

Industry body Assocham has sought amendments in the tender documents for the mines to be auctioned, saying there were some players bidding for blocks beyond mineral requirements for their end-use plants.

“There is no restrictive clause in the MMDR (Mines and Mineral Development and Regulation) Act/Tender document as far as the eligibility of the bidder is concern, which offers an opportunity to bidders to indulge in hoarding and accumulating the resources,” Assocham said in a letter to the Mines Ministry.

As a case in point, one of the companies in Karnataka has garnered 7 million tonnes per annum (MTPA) iron ore resources and has a pelletising plant with production capacity of mere 1.2 MTPA, the industry body said. The company has an annual iron ore requirement of 1.344 MTPA only.

“Despite having an annual requirement of 1.344 MTPA, this bidder has garnered mines in the State auctions with total annual production capacity of 5.78 MTPA,” it said.

In addition, the bidder already had mines other than auction with a total production capacity of 1.3 MTPA; thereby totalling annual production capacity of mines held by the bidder is 7 MTPA, the letter said. As a result, the resources will never convert to production and steel industry would continue to suffer for want of raw material.

Such practices were not only counterproductive but also against the overall objective of the MMDR Act, it said adding that the State government will also lose revenues and auction premium, it said.

“To avoid such a scenario, some additional provision can be made in the standard tender document for auction of mineral block in line with the eligibility condition as prescribed in the standard tender document for the auction of coal mines.

“Hence, Assocham requests the Ministry may examine the... suggestion and consider directing the state governments to incorporate such clauses that eliminate the possibility of such bids that when successful, lead to hoarding of mineral wealth,” the letter said.

A query sent to Mines Secretary Anil Gopishankar Mukim remained unanswered.

The Mines and Mineral Development and Regulation Act, 1957 was amended in 2015. Subsequent to the amendment, the Centre notified the Mineral Auction Rules, 2015 on on May 20, 2015 to prescribe the procedure of the auction process.

The government recently said of the 55 mines that were auctioned in the last three years, five mineral blocks have become operational and two to three more mines will start operation by next month-end.

Of the total 53 mines auctioned so far, around ₹1.83 lakh crore will accrue to the States as revenue over the lease period, the government said last month.

Published on February 25, 2019

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