Mines Auction: New mine owners in Odisha face several challenges

Traffic congestion, monsoon rains, the pandemic and sharing mines with the old lessees has left the new owners of Odisha's auctioned mines "hamstrung".

The amended mining laws grant miners whose leases lapsed on March 31 six months, or until September 30, to remove previously mined material, equipment and infrastructure. He or she can seek an additional month after that. As of last week, an estimated 26 million tonnes (mn t) of ore (of the 42 mn t as on March 31) mined by the old lessee were lying at about 19 mines. This is unlikely to be despatched before October.

Meanwhile, the new owners, who have been transferred existing clearances for two years, are obliged to produce up to 80% of an average production of the last two years.

This is looking increasingly difficult, say officials of JSW Steel and AM/NS India (the ArcelorMittal Nippon Steel joint venture).

Ground realities of sharing a mine

In a letter to the Principal Secretary, Mines, Odisha, JSW Steel says it did an aggregate production of 1 mn t from all four mines it bagged (Nuagaon, Narayanposhi, Ganua, Jajang). Their combined production, going by previous years' records, should have at least touched 1.7 mn t.

SteelMint has reviewed this four-page letter sent a fortnight ago that details the conditions on the ground beyond its control which restrict it from enhancing production to meet this 80% target.

For starters, it is inconvenient for two lessees, old and new, to be operating from the same mine. There is an acute shortage of stacking area with both vying for the same designated spaces.

Stacking

The state waives off stacking requirements before despatch if miners agree to pay a royalty on the highest grade, irrespective of the mined ore. With premiums of more than 100%, new lessees would rather stack than pay a penny more. But this requires space, for which JSW says it is at the mercy of the ex-lease.

Working in forest areas

It also requires weighbridges, magazine, fuel tank, high mast tower, road lightening, site service utility units (ports cabin), electrical connectivity facility, etc apart from stacking facilities. The letter complains that local forest authorities, perhaps unaware of the changes brought on by the legislative amendment (transferring permissions), are preventing construction of temporary facilities despite NPV for use of diverted forest area having been submitted. (New mining plans have to be applied for within 120 days of the execution of the lease).

Transport issues

With both old and new lessee vying for trucks, there is an "insurmountable demand-supply issue, exacerbated by the COVID-19 pandemic". There are also caps on the number of trucks, restrictions on timings at certain critical stretches, the historically sorry state of roads, and the marathon jams to deal with.

According to industry sources, but for JSW and AM/NS India, none of the other new lessees have commenced production.

Up for re-auction?

Of the 19 mines auctioned in January, the fate of four hangs in balance. The highest bidder in these cases has either not paid upfront dues, stamp duty or bank guarantee and not signed a lease deed within the prescribed deadline.

Kolkata-based, Shyam Ore's payment just in time for Jilling-Langalota could be condoned, say officials in the mines department. Three others (of more than 15 mn t in combined EC capacity) could be revoked, officials told SteelMint. These are: Tehrai, for which Tarama Apartments made the highest bid, Nadidihi, Rangalibeda and Nadikasira (one mine) which Vishal LPG made the highest bid for and Nadidihi which Sociedade de Fomento bagged but has now gone to court refusing to operate under the previous lessee's clearances and limits.