Odisha Issues Fresh NITs for 20 Merchant Mine Blocks

On the heels of annulment of auctions, the Odisha government has issued fresh Notice Inviting Tenders (NITs) for 20 lapsing merchant mine blocks.

The state government has invited both financial and technical bids for 12 iron ore blocks, two manganese blocks and six iron ore & manganese blocks. Five out of these 20 blocks on offer for online auctions are reserved for end use plants- Thakurani, Jaribahal, Roida II, Ganua and Narayanposhi iron & manganese block. The rest 15 blocks have been set aside for merchant miners.

The last date for purchase of tender documents after online payment of fees on e-auction platform is December 30, 2019. The deadline for submission of bids in respect of these 20 blocks is January 3, 2020. The tender document has been priced at Rs five lakh for each block. Bidders who have already paid the tender fees in response to previous NITs issued on October 4 and 14 are exempted from making further payments.

On December 3, the state government was constrained to annul the tenders it had invited for these 20 lapsing merchant mine blocks after some bidders raised objections to practice of clustered bidding of companies of a single conglomerate was unfair since it led to unequal competition. Both ArcelorMittal and Adani Enterprises had given written submissions to the state government on bids for Nuagaon block citing clauses of restrictive practices.

The Nuagaon lease, currently held by KJS Ahluwalia, is a massive iron ore block straddling 767.28 hectares and it has balance reserves of over 700 million tonnes. Owing to its immense deposit, the floor price for auction of this asset was kept at 50 per cent of the sale value (of the mineral) determined as per IBM (Indian Bureau of Mines). The block attracted 15 technical bids--six of which were JSW Group companies--JSW Steel, JSW Raigarh, JSW Bengal Steel, JSW Jharkhand Steel, JSW Utkal Steel and Amba River Coke.

In the recast tender documents, the guidelines would be spelt out explicitly to overcome this anomaly. While a subsidiary would still be able to use the net worth of its parent firm to apply for a mineral block, both cannot compete for the same resource, the source added. The state steel and mines department has already alerted SBI Caps, the consultant for mineral block auctions to work on the fresh tender documents.

In the first lot of 10 merchant iron ore and manganese blocks offered for online auctions, the state government has received 177 bids in all from 58 companies- large steel producers, secondary steel makers, pellet manufacturers and top merchant miners from Odisha and Goa. ArcelorMittal, Tata Steel, JSW Steel, Jindal Steel & Power Ltd (JSPL), Vedanta owned Electrosteel Steels Ltd, ferro alloys maker T S Alloys, Aditya Birla Group-owned Essel Mining & Industries Ltd, KJS Ahluwalia, and Serajuddin & Company are among the companies which have bid for Odisha's iron ore mines.

The conduct of ascending forward electronic auctions and submission of final price offer on the auction platform will be done between January 31 and February 21, 2020 while the Letter of Intent (LoI) is to be issued from February 10 to February 29, 2020.

The state government has decided to insert some additional conditions in the tenders for the expiring merchant mine leases. A successful bidder after obtaining all statutory clearances needs to produce in the first two years at least 80 per cent of what the mine actually produced in the preceding two years.