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| Last Updated:17/07/2019

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Indian mining sector hit by dissension over expiring mining leases


Date | June 10, 2019:

With the expiry of mining leases (MLs) for 354 mines across India fast approaching and delayed fresh auctions looming large, sharp differences have surfaced among various stakeholders in the sector.


The narrative until now among a section of stakeholders has been of an impending shortage of minerals if the government fails to auction the new MLs, but as the March 2020 deadline for the expiry of the MLs draws close, various sections of mining and mineral-based industries are opposing this stance and even discounting any possibility of mineral shortages in the medium term.


As reported by Mining Weekly Online earlier, the Federation of Indian Mineral Industries (FIMI) in a presentation to the government has sought that all MLs expiring next year should be granted a ten-year extension and, thereafter, be renewed every 20 years or until the reserves in the respective mines are exhausted.


This has been suggested by FIMI to avoid inevitable delays as state governments are not prepared to hold auctions ahead of the March 2020 deadline and to pre-empt any risk of raw material supplies to user industries.


However, steel companies and representative bodies, including the Associated Chambers of Commerce and Industries (Assocham), the Indian Chamber of Commerce (ICC) and other downstream processing industries, have opposed the grant of any extension to existing ML holders, including those of 35 operating iron-ore mines of the total 354 mines where MLs are soon to expire.


The 35 operational mines have an aggregate production capacity of 55-million tons a year.


The steel companies, in a representation to the National Institute for Transformation of India Commission (NITI Aayog), have maintained that MLs granted prior to 2015, and expiring next year, would be in for fresh rounds of bidding as per current legislative environment.


The steel companies have pointed out that granting extensions to current MLs would lead to a significant loss of revenue that would accrue to the government if a premium from competitive bidding for the assets were to be realised.


Joining in the fray of dissensions, domestic pellet manufacturers have discounted any risks of a shortage of iron-ore in the wake of lapsing MLs and possible delays in holding fresh auctions.


In representations before NITI Aayog, Pellet Manufacturers’ Association of India (PMAI) said that mines with aggregate production capacity of more than 200-million tons a year would still be in operation and expiring MLs should not be granted any extension. Instead, fresh auctions should be held even under new timelines, as mandated under the Mines and Minerals (Development and Regulation) Act of 2015.


“There would not be any scarcity of iron-ore in the country post-2020, around 200-million tons a year of mine capacity will still be in operation.
Speculation that there will be a crisis-like situation if the leases were not granted immediate extension are false and baseless. The mines will still be operating and are capable of meeting domestic requirement,” PMAI said in its communication to NITI Aayog.