Mining picks up despite slow pace of auctions in States

The mining activity in the country is showing signs of revival, despite the mining lease auctions at the state government level still moving at a slow pace.

Data from the government have largely been positive about the sector, even though industry and analysts remain cautious about the uptick in mining.

According to the GDP data, the mining and quarrying sector grew at 7.4 per cent in the fourth quarter of 2015-16 as compared with 6.9 per cent in the same quarter last year.

Growth was also reflected in the Index of Industrial Production (IIP) data where mining grew 2.2 per cent in 2015-16 as compared to 1.4 per cent in the previous year. In the IIP data for April 2016, mining continued its growth at 1.4 per cent as compared with a contraction of 0.6 per cent in the same month last year.

Iron ore has been major contributor to the growth in mining activity in the country. According to the Ministry of Mines’ estimates, iron ore production grew 16 per cent to 155 million tonne in 2015-16 (129 million tonne).

“With more mines to be auctioned in Karnataka this year and reopening of existing mines in Goa, in 2016-17 the overall iron ore production could cross 180 million tonne,” a senior official of the Mines Ministry said.

More than a year after the Mines and Minerals (Development and Regulation) Act came in to force, only six mineral blocks have been auctioned out of the 47 that were notified for auctions by nine State governments.

“The Centre had provided all the necessary support and hand holding to state governments in conducting auctions. Now this process should be expedited which will help in growth of the mining sector and revenue generation to the States and the country as a whole,” Narendra Singh Tomar, Minister of Mines and Steel said at a meeting of State mining ministers in Jaipur on May 27.

While some States have faced delays due to legal issues relating to stamp duties, others have cited lack of bidders.

However, going by the example of the successfully auctioned mineral blocks, interest for the minerals remains healthy. Out of the six blocks auctioned, three were won by Essar Steel, Vedanta Ltd and Shree Cement.

“There is still an issue regarding the data on reserves in these mines, but there is no doubt that the industry wants quality assets. The mining sector has been stagnant for too many years now,” an industry official said on condition of anonymity.

While the auction process might be moving slowly, the industry official did acknowledge the quicker environment and forest clearances.

“Out of the 573 environment clearances granted since 2014, 144 or around 25 per cent has been for the mining sector. This doesn’t include coal mining so it clearly shows procedurally the Centre has thrown its weight behind the mining sector. It is just that the States need to quicken the pace of the auctioning the leases,” the official added.

State mining ministers informed the Centre that they plan to auction 108 mining blocks. The Centre’s estimations are more moderate. “Our expectations are that at least 20-25 mineral blocks will be auctioned in the next three months and around 50-60 in the 2016-17 fiscal,” said a senior official of the Mines Ministry.

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