KOLKATA (miningweekly.com) – Indian steel producers are up in arms over the grant of an iron-ore mining lease to merchant miners, in the southern province of Karnataka.
The provincial government of Karnataka, where a Supreme Court order in 2011 banned iron-ore mining, was hoping to restart operations and in the process granted a mining lease to merchant miner MSPL Limited, last month.
Steel producers across the country, as well as those with manufacturing plants in the province, were crying foul, claiming that all applications from actual iron-ore users had been rejected by the provincial government and instead a mining lease had been granted to a merchant miner.
In a communication to Prime Minister Narendra Modi, a representative body of steel producers said that “the steel industry strongly objects to the granting of the mining lease and demands that mining concessions should be allocated through a transparent bidding process as directed by the Supreme Court and fails to understand why the provincial government hurriedly recommended [the] mining lease without competitive bidding”.
The steel producers pointed out that steel plants in Karnataka, as well as other locations, were forced to resort to importing iron-ore to keep the plants running in the face of iron-ore shortages, while being deprived of assured linkages to raw materials and mining leases being granted to merchant miners.
Ever since the court eased the ban on mining in the province and miners were allowed to sell the raw material through e-auction, steel producers have persistently alleged that merchant miners were colluding to keep the base price high at a time when global iron-ore prices were falling.
Steel producers maintained that the granting of mining concessions to merchant miners without an auction process would go against the stated policy of competitive bidding and a level playing field for steel producers to bid for captive iron-ore, and also that it would aggravate price manipulation by merchant miners.
On Monday, JSW Steel Limited mothballed its $5.66-billion steel and power project in the eastern Indian province of West Bengal after failing to secure any linkage of either iron-ore or coal.