20 SEP, 2012, ET BUREAU
NEW DELHI: India's top iron ore producing state of Odisha plans to go in for e-auction from next year to curb illegal mining. In a notification issued earlier this month, the state government said it hopes e-auction will bring in transparency and improvement in the existing system. Besides iron ore, which fetches Odisha the most revenue by way of royalties, manganese and chrome will also be e-auctioned.
The state government has constituted a five-member panel, headed by principal secretary of the steel and mines department, to work out the modalities. The panel will also have the chairman of Orissa Mining Corporation and representatives of the finance and law departments as members.
Officials said the move is inspired from Karnataka, which raised huge revenues recently by the Supreme Court-mandated e-auction of iron ore. The court had last year banned all mining activities in the mineral-rich state following allegations of rampant illegal mining.
E-auction has fetched Karnataka as much as Rs 3,500 per tonne of iron ore as compared with Rs 2,700 it earned per tonne in the earlier price regime.
"It's been excellent for the mining industry because prices, thanks to the shortage, have been very high," said Rahul Baldota, executive director of MSPL Ltd, a Karnataka-based iron ore miner.
Baldota, however, said direct contracts are needed in the long term for strong buyer-seller relationship. "Minerals products, like any other, are identified with a particular supplier. There is a Vale fine, or Vale lump, or Sesa fine, that doesn't just guarantee a product quality but also the delivery of a service," he said.
Orissa Mining Corporation is already auctioning chrome, a key ingredient for stainless steel, after it was taken to the Competition Commission of India by a lobby group of steelmakers for allegedly abusing its dominant position by fixing arbitrary prices of iron ore.
Odisha, which produces a third of the country's iron ore, is home to some of the country's biggest miners such as Birla's Essel Mining, KJS Ahluwalia and Rungta.
Top Indian steelmakers Tata Steel, Steel Authority of India and JSPL have or are in the process of setting up downstream plants in the state. South Korea's Posco has also proposed to build a 12-million-tonne-per-annum steel plant in the state, counting on captive iron ore mine. It is not yet clear how auction would be adjusted against captive users' mines.
NEW DELHI: India's top iron ore producing state of Odisha plans to go in for e-auction from next year to curb illegal mining. In a notification issued earlier this month, the state government said it hopes e-auction will bring in transparency and improvement in the existing system. Besides iron ore, which fetches Odisha the most revenue by way of royalties, manganese and chrome will also be e-auctioned.
The state government has constituted a five-member panel, headed by principal secretary of the steel and mines department, to work out the modalities. The panel will also have the chairman of Orissa Mining Corporation and representatives of the finance and law departments as members.
Officials said the move is inspired from Karnataka, which raised huge revenues recently by the Supreme Court-mandated e-auction of iron ore. The court had last year banned all mining activities in the mineral-rich state following allegations of rampant illegal mining.
E-auction has fetched Karnataka as much as Rs 3,500 per tonne of iron ore as compared with Rs 2,700 it earned per tonne in the earlier price regime.
"It's been excellent for the mining industry because prices, thanks to the shortage, have been very high," said Rahul Baldota, executive director of MSPL Ltd, a Karnataka-based iron ore miner.
Baldota, however, said direct contracts are needed in the long term for strong buyer-seller relationship. "Minerals products, like any other, are identified with a particular supplier. There is a Vale fine, or Vale lump, or Sesa fine, that doesn't just guarantee a product quality but also the delivery of a service," he said.
Orissa Mining Corporation is already auctioning chrome, a key ingredient for stainless steel, after it was taken to the Competition Commission of India by a lobby group of steelmakers for allegedly abusing its dominant position by fixing arbitrary prices of iron ore.
Odisha, which produces a third of the country's iron ore, is home to some of the country's biggest miners such as Birla's Essel Mining, KJS Ahluwalia and Rungta.
Top Indian steelmakers Tata Steel, Steel Authority of India and JSPL have or are in the process of setting up downstream plants in the state. South Korea's Posco has also proposed to build a 12-million-tonne-per-annum steel plant in the state, counting on captive iron ore mine. It is not yet clear how auction would be adjusted against captive users' mines.
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