Breaking News
The government has paved the way for auctioning of mining leases in future. But 2027 is a far way date and until then industry and stakeholders feedback to auctioning, by Shoma Patnaik

Going, going, gone

 

Recently, on March 31, before the start of new financial year 2016-17, the Chief Minister, announced that mines in Goa will be auctioned in future and that they no longer will be approved through the Goa Grant of Mining Lease Policy 2014. The Chief Minister said that auctioning will be in 2027 when the leases expire and it is as per provisions made in the Central Mines and Mineral (Development and Regulation) Act. The state Mining Lease Policy is no longer necessary, said the Chief Minister.

It is an important announcement that changes the mining situation forever. Goa’s mining industry is now open to all. The jumbo, metal conglomerates that are constantly on the look-out for any new mineral blocks, like Jindals, Essar, etc., could be new mine owners in future. It is a scenario to mull over, considering the small dimensions of the state.

Reactions to the announcement from industry are varied. While some companies have said that the government is only following a central law, others are cautious in expressing opinion. They do not want to be reminded of auction after getting their lease renewed lately and escaping competitive bidding. Companies are awaiting Supreme Court verdict on a petition filed by an NGO challenging the lease renewals by the state. Further they are also caught up with re-start activities after mines remained closed for nearly four years.

Response from mining stakeholders indicates that they are in favour of auctions. Stakeholders, viz. the truckers, the equipment operators, barge owners, laid-off employees, etc., say that they don’t care who are the new lease owners. All they want is mining leases to be operating in future so that there is work enough for all. Stakeholders said that they are fed up of lack-luster manner in which mining resumption is being taken up by the companies. Some stakeholders also feel that auction is just a threat to the industry and that the government will do a “back-track” when the time is up for leases.

Meanwhile sources at the department of mines, said that auctions require geological survey along with host of studies. The state lacks geologists to properly assess the ore reserves, said sources.

Mining in Goa shut down operations in September 2012. Currently all permissions to restart have been received but slump in international price of ore is taken off the shine of resumption. Further 2027 looks too distant when we are facing lost market and other issues, says a small mine owner. Further the amended MMDR that looked tough appears to be softening in stance. It drafted a new set of rules Mineral Concession Rules 2016 that gives flexibility for selling auctioned leases along with other relaxations.

By 2027 the legislation could change again on lease ownership. In the meantime our hands are full with resuming mining operations, said the small mine owner.

Just 5.6 million tons of ore have been mined by 88 mining leases in Goa after permission was given to restart. The government earned Rs 36 crore on royalty through fresh mining.

 

The Mines and Minerals (Development and Regulation) Amendment Act (MMDR), 2015, that was passed by the parliament on 20 March 2015 is deemed to come into force from January 12 2015. It has several important regulations of which auctioning of iron ore and non-coal mineral mines by a state is a major clause. Purpose of auction is to bring transparency in the lease allocation process and also to increase the earnings of the state. Latest update is that six mines have been auctioned so far, in Odisha, Chattisghar and Jaharkhand. This includes two blocks of limestone in Jharkhand, two blocks of limestone and one block of gold in Chattisagharh and one block of iron ore in Orissa , a move, that will get the state governments Rs 18,107 crore in revenues over the next 50 years.

The last successful auction bid was by Essar Steel which got the first iron ore block put up for e-auction by the Orissa government. The block has reserves of 99.54 million tons of iron ore and was picked up by Essar at a reported cost of Rs 11,300 crore to the Odisha government. This revenue includes royalty of around Rs 2,779 crore, DMF contribution of Rs 278 crore, NMET contribution of Rs 56 crore. The total estimated value of the iron ore reserve is about Rs 18,500 crore, according to reports.

 

After the 2015 amendment to the MMRD Act all leases are deemed to expire in 2020, till the date of renewal or 50 years from the date of grant of the lease whichever is later. Thereafter the leases will have to be auctioned as per the amendment. Do I see new people coming into Goa mining? Only time will tell who is the winner.”

Shivanand Salgaocar, managing director, VM Salgaocar Group and president, GMOEA

 

There is nothing new in this. All mining leases in future have to be auctioned as per central law. And if you are asking me about mining business going out of Goan companies, already 60 per cent of Goan mining is owned by an outside company and it has been that way for a long time now.  Vedanta is not a Goan company and Chowgules also are not from Goa. But as far as I am concerned I am an Indian and have no issues with Indian companies owning mines in Goa.”

Ambar Timblo, managing director, Fomento Resources

 

The government has judiciously said in future all leases will be auctioned when actually it is the regulation. Auction is not bad.  As a principle it is ok if it is without any vested interest. But again without vested interest who will come forward to bid. Whoever buys a mine will be interested in taking as much as he can get from it. When mining closed in Goa all workers- temporary, contract, barge, MPT were sent home.  It is the government’s responsibility that it includes  a clause that workers will continue to be employed in any mine being auctioned. It should be of paramount importance and in fact the cardinal principle before selling leases through auction that people do not lose jobs.”

Christopher Fonseca, trade union leader

 

For us barge industry as long as mining goes on whoever does the mining does not make difference. All that we are concerned about is the quantity. But there has to be organized mining which means that associations will exist that set rates, etc. We have always dealt with Goan miners and may not be comfortable dealing with outsiders. But that does not make such a difference. ”

Atul Jadav, stakeholder, president, Goa Barge Owners Association

 

How does the announcement affect mining industry? Mining is not going to be stopped. Only new players will come in. They may not even be new players because who knows? The government is only implementing the Act as part of MMDR.  Impact of auctions is not only for Goa but for all over India.”

S Sridhar, executive director, GMOEA

Check Also

Lucky Kaul and Shiv Kumar win Goa edition of Tata Crucible Quiz

Lucky Kaul and Shiv Kumar from Birla Institute of Technology and Science (BITS) Pilani, Goa emerged …