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FIMI falls in line with govt auction plans

FIMI falls in line with govt auction plans

Photo by Reuters

28th April 2015

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) - After opposing mineral resource allocation through auctions, the Federation of Indian Mineral Industries (FIMI) has accepted it as a fait accompli, assuring the government of its cooperation.

In a communication to the Secretary for the Mines Ministry, Anup Pujari, FIMI said, “we would like to assure you that despite our initial reservations on auction of mineral resources, now that the law is in place, we will do our utmost in complying with the rules in letter and spirit to make the bidding process a success”.

“However, our comments and suggestions on the draft mineral auction rules might be considered as the same will facilitate smooth implementation of the rules leading to growth of the mineral sector,” the FIMI communication said.

The Mines, Minerals Development and Regulation Act (MMDRA), paved the way for the allocation of mineral resources, including iron-ore, bauxite and limestone, through the auction route, replacing government allocation. The draft rules for auction under the new legislative rules were framed by the Mines Ministry and circulated to stakeholders earlier this month, seeking comments and suggestions.

Suggestions made by the representative body of miners included that while the provincial government would have the freedom to conduct auctions of mineral resources as per guidelines laid down by the federal government, the provinces should exclude from the auction those mineral resources for which reconnaissance permits or a prospecting permits had been granted before the promulgation of MMDRA.

The draft rules stipulated that the provinces could lay down specific end-use conditions for prospective bidders or, in other words, mineral resources could be put up for auction for captive use only.

However, FIMI had suggested that the rules should lay down a specific list of end-uses, such as iron-ore for steel, pig iron and sponge iron plants; bauxite earmarked for alumina refining, refractories, abrasive, high alumina cement and alumina castable manufacturing; while end-uses for limestone should include cement, steel plants and soda ash.

The miners have sought that a successful bidder at the auction be permitted to mine all minerals including ‘associated minerals’ in the same mining block irrespective of whether the miner had specifically bid for that associated mineral or not.

The draft rules have stipulated that a part of the revenue quoted in the bid document of the miner be apportioned and made payable for each of the associated minerals that the miner produced apart from the primary mineral from the block secured at the auctions.

FIMI earlier had termed the auctions a “death knell” for Indian mining. The mining organisation’s opposition was based on claims that “one auctions a commodity when one is sure what one is auctioning and the bidder should know what he is being offered in terms of quantity and quality of the product.

“Since exploration is highly capital intensive it is not possible to explore the entire deposit initially at one go as it would render any industry based on the mineral uneconomic and unviable.  How can one auction or anybody bid for reconnaissance or prospecting over an area when no one knows what it contains?” FIMI asked.

Edited by Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia

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