Indian Steel Manufacturers Call for Parity in Iron Ore & Coal Block Auctions
Business Standard reported that Indian steel producers have asked for a level playing field in auctions of coal and iron ore blocks. An industry source said that “The skewed norms in Mineral Auction Rules, 2015 will lead to the concentration of ore in a few hands. Not only will this phenomenon have an adverse effect on the balance iron ore, pellet and steel producers, but also lead to a manipulation of the market and pricing, thereby hurting the consumers.”
Although electronic auctions of both coal and non-coal blocks are governed by the same legislation, Mines and Minerals Development & Regulation Act 2015, steel producers feel there is a glaring disparity between the eligibility norms for bidders. While in case of coal blocks, the capacity of the end use plant and quantum of coal is considered, there are no such riders for auctions of non-coal blocks, including iron ore.
Under Coal Block Allocation Rules 2017, a company would be eligible to bid for any Schedule II coal mine, or an operating coal mine, if it has incurred expenditure of at least 80% of the project cost of the unit, or phase of the specified end use plant, for which the concerned company is bidding. If the end use project is being commissioned in phases, the other phase or unit will also be eligible provided a minimum of 40% of the expenses have been incurred.
In contrast, for non-coal block auctions, the Mineral Auction Rules of 2015 mandate that a particular mine, or mines, may be reserved for specific end use. According to the model tender document, companies with installed plants are eligible for bidding. However, the document does not mention the requirement of capacity of end use plants.
Source : Business Standard