Mining ordinance to affect projects in Odisha

Bhubaneswar: The union government's decision, via an ordinance, to allocate all future mines through auctions is likely to affect some projects in Odisha, including Posco and Bhusan Power and Steel Ltd (BPCL), while it has come as a blessing to some companies sustaining to run their plants in the absence of raw materials in the state.

The Odisha government has recommended a prospecting lease in favour of Posco India for the Khandadhar iron ore deposit spread over 2,500 hectares in Sundargarh district of the state. The South Korean company is setting up a $12 billion project in Jagatsinghpur district.

The state government has also recommended a lease in the Thakurani mines of Keonjhar district for BPCL, a mines department official said. Now, the companies may now have to bid for an ore reserve for captive consumption to feed their plants.

The state government had recommended in favour of the two companies under its commitment mentioned in the Memorandum of Understanding (MoU). The government, which had inked MoU with 50 steel and three aluminium projects, had assured them that raw material linkages to run their plants would be facilitated.

"We have recommended a prospecting lease for Posco India. The state cabinet also took a decision against auctioning the Khandadhar mines meant for Posco. Now, the central ordinance has decided to auction all the mines in future. So, it is up to the centre to decide on the matter," Steel and Mines Minister Prafulla Mallick told IANS.

"The nation will be sending a wrong signal to the international investor community by ignoring the international commitment for supporting the raw material requirements of the project, which is the largest FDI in the country," Mallick added.

There is however ambiguity over granting a mining lease to Bhusan since the Supreme Court had directed the state government in April 2014 to grant this.

"Unless they have prior central approval or a letter of intent from the state, all pending applications will stand cancelled as per the ordinance," said a mines official.

So, the National Aluminium Company(Nalco) will retain its rights over the Potangi bauxite mines as the central government has already approved this and the state government will only execute the lease, the official said.

However, the decision to auction the mines will be fruitful for some companies, including Vedanta Alumina, which has set up a refinery and smelter in the state. The company is running its plants at 25 percent capacity due to a shortage of raw material.

Now, these companies can participate in the bidding to run their plants. The bidding process would also not affect industrial activities in the state.

"There would be no problem of shortage of raw material in the state. As per the state government's mandate, 50 percent of the iron ore from non-captive mines in Odisha has to be given to the plants located in the state," Mallick said.

The Odisha High Court has also upheld the decision to reserve 50 percent of the mineral for state-based industries while the remaining can be sourced out, the minister said. Besides, the Odisha Mining Corporation (OMC) has 11 mines that can come handy for projects coming up in the state.