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Iron Ore|Mining|Steel|Environmental|Operations
Iron Ore|Mining|Steel|Environmental|Operations
iron-ore|mining|steel|environmental|operations

India’s Mines Ministry makes contingency plans for expiring mining leases

27th June 2019

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – India’s Mines Ministry is drawing up contingency plans to offer a three-year extension for merchant mining leases slated to expire in March next year.

Sources in the Ministry said that while the government is pushing state governments to initiate the auction of about 288 mining leases expiring next year, the risks of slippages in completing the auction process, and forced closure of the operating mines with the resultant disruption of raw material supplies to metal companies, are “clear and distinct”.

Metal companies, including domestic steel mills, have expressed serious concerns over disruptions in iron-ore supplies if the mining leases of a large number of iron-ore mines were to expire forcing current lease holders to stop operations. Hence, the Mines Ministry is working on an option of offering a three-year extension for existing mining leases, the Ministry sources say.

It was pointed out that even if auctions were to be completed well before the expiry of existing mining leases, new lease holders would take at least two to three years to submit applications for fresh mandatory environmental and forest clearances and to secure approvals.

However, there is still no clarity available from government sources as to whether if the planned extension were to be pushed through it would muster legal backing. It might be pointed out that in the case of iron-ore mines in Goa, the Supreme Court held last year that renewal of mining leases was illegal since the Mines and Minerals (Development and Regulation) Act, which came into force in 2015, had made auction mandatory in the allocation of mining leases for all mineral assets to investors. The Goa iron-ore mines were forced to close down in March 2018 and a resolution is proving elusive.

As reported by Mining Weekly Online earlier this month, the issue of whether mining leases set to expire should be auctioned or granted fresh extension has sharply divided various mineral industry segments.

Fearing disruptions of raw material supplies to downstream units from delayed auctions, the Federation of Indian Mineral Industries (FIMI) has sought a ten-year extension of mining leases expiring in March 2020.

FIMI in its presentation to the government pointed out that over 70% of domestic steel production capacity did not have captive iron-ore mines and were dependent on merchant iron-ore mines for sourcing their raw material, and that if these were forced to close down owing to auction delays, the steel sector would face acute disruptions.

But steel companies represented by the Associated Chambers of Commerce and Industries and the Indian Chamber of Commerce have opposed the granting of any extension to existing mining lease holders on the grounds that not holding auctions would lead to a huge loss of revenue for the government by way of the revenues accruing from a competitive bidding process.

Edited by Creamer Media Reporter

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