APEXCOURT ORDER ON CATEGORY-C MINES’ AUCTION
The Supreme Court’s order last week allowing the Karnataka government to e-auction the economically viable Category-C mines is good news for the state but the restriction on participation of bidders will fail to bring competitiveness to the sector, say experts.
According to the experts, though the e-auction process is meant to bring transparency and fetch right value in the allocation of iron ore mines, the objectives are unlikely to be met as only end users and players from in and around Karnataka have been allowed to take part in the bidding.
The apex court-appointed Central Empowered Committee (CEC) had categorised 168 mining leases in Karnataka into A, B, and C, based on the extent of illegalities committed by them. Category A comprised 45 mines that had negligible or no illegalities. Category B comprised 72 mines, where pits were found outside the lease area. And, 51 mines that operated in more than 15 per cent area outside their lease boundaries were put under Category C.
Following the CEC’s report, the court, in 2013, had ordered the cancellation of all the 51 leases for involvement in illegal mining, and asked the state to re-allot them to end users through a transparent bidding mechanism. In 2016, the first lot of seven mines auctioned by the state was taken up by JSW (5) and MSPL (2).
However, the second lot of seven, which went under the hammer, failed to elicit any response. Industry representatives said restricted participation invited “market fiends” like monopoly, enabling large-scale private steel players to corner valuable resources. Concentration of resources in a few hands was not ideal, he added.
Basant Poddar, former chairman and member, Federation of Indian Mineral Industries (FIMI), South, said since only seven of the 51 C-category mines had been auctioned, it had not served the purpose of supply of captive ore, leading to thousands of crores in revenue loss to the state government. The combined capacity of all C-category mines is about 5 million tonnes per annum.
Seeking the expeditious auction of new mining areas, he said all kind of players should be allowed to participate in the biding process.
An official spokesperson for Vedanta said, “E-auction per se will not ensure transparency and fair pricing, unless it is more inclusive and competitive. The Supreme Court has asked the state government to submit a more cohesive proposal to auction the remaining C category mines. The state should proactively work to ensure that mines are economically viable and fetch the best price in a transparent process.”
Currently, Karnataka is a closed market, and only end users in and
The CEC had categorised 168 mining leases in Karnataka into A, B, and C, based on the extent of illegalities committed by them
Category A comprised 45 mines that had negligible or no illegalities
Category B comprised 72 mines, where pits were found outside the lease area
51 mines that operated in more than 15 per cent area outside their lease boundaries were put under Category C
SC has asked the states to submit a more cohesive proposal to auction the remaining C-category mines around the state can purchase iron ore from Karnataka leases.
The plants can import from other states and outside the country, while the leases cannot export or sell to traders. The pricing of iron ore in Karnataka does not follow any international index.