KOLKATA (miningweekly.com) – The Indian government has cracked the whip on mineral-bearing states to ensure that they hold timely auctions of 288 mineral blocks, leases of which are slated to lapse in 2020.

The federal Mines Ministry has issued an ultimatum to all mineral-bearing states to complete fresh exploration of leasehold areas, which are lapsing, so that new auctions could start from July 2019, well before the end of the lease period on March 31, 2020 and prevent any disruption of these operational mines under new lease holdings.

The Mines Ministry has noted that despite repeated reminders to prepare the roadmap for initiating fresh auctions, starting with conducting fresh exploration, almost none of the mineral-bearing provinces were anywhere near the timelines set by the government.

In a communication to the states, the Mines Ministry noted that “all state governments will need to complete mandatory G2 level of exploration of the 288 mineral blocks by December 2018, in case of all operational mines”.

The mineral blocks facing lease lapse include iron-ore, manganese, limestone, bauxite and graphite, according to a list drawn up by the Ministry of which 59 mines are operational while the balance are non-working mines.

The Mines Ministry has communicated that central government agencies such as Geological Survey of India (GSI) and Mineral Exploration Corporation have been fully geared up to take up enlarged tasks and state governments should seek their help in completing exploration by year-end.

The Ministry was particularly concerned since the bulk of these mines with leases expiring are iron-ore blocks and any delay in new leaseholders taking control of operations will lead to domestic steel mills facing disruptions in raw material sourcing, at a time when most of these domestic mills are operating at almost maximum capacity and are already facing shortage of raw materials.

According to information from the government, the Karnataka government has to date been able to complete G2 level of exploration at only eight iron-ore mines in the region of the total 33 blocks where leases will lapse in 2020. In the eastern state of Jharkhand, the government has just given consent to start exploration at five iron-ore mines for leases expiring in 2020.

The aggregate production capacity of all the iron-ore mines where leases were about to lapse was estimated at 85-million tons a year, which is a significant volume and any risk to production levels from these mines will have a disruptive impact on steel mills without captive sources of iron-ore and that are entirely reliant on merchant purchase to meet their raw material requirement, government officials pointed out.

The Federation of Indian Mineral Industries has already expressed apprehension that raw material availability may be affected as states have been tardy in their preparedness.