KOLKATA (miningweekly.com) – The mining industry in India has requested that the Mines Ministry include a provision in auction rules that will prevent successful bidders hoarding resources.

The industry has pointed out that a large number of bidders at mineral block auctions aggressively put in bids and secure mineral assets far in excess of the requirement of their end-use plants, which is tantamount to resource hoarding and accumulation of resources aimed at starving competition of such raw materials.

In a communication to the Mines Ministry, Associated Chamber of Commerce and Industry (Assocham) said that the Mines, Minerals Development and Regulation Act 2015, which made auction of mineral blocks the mandatory route for the allocation of assets, had neither any restrictive provisions relating to eligibility of bidders, nor any provision pertaining to the requirement of end-use plants, opening up a window for resource hoarding.

It cited the case of a company securing iron-ore blocks that could yield about seven-million tons a year of raw material, while its end-use pelletisation plant had a capacity of just 1.2-million tons a year, but the communication refrained from naming the company.

Detailing this allegation of resource hoarding, Assocham said that the company’s requirement of iron-ore would not be more than 1.3-million tons a year, but that it had successfully participated in the auction by the Karnataka government for mines with production of 5.78-million tons a year. And this after the company already had iron-ore mines that produced about 1.3-million tons of raw material for its pellet plant.

Such practices were counterproductive as such successful bidders would never optimally mine iron-ore blocks secured, while other steel companies were being deprived of raw material sources, the industry body pointed out.

Assocham has, therefore, sought that the Mines Ministry direct all state governments to amend rules in auction documents to incorporate clauses linked to end-use requirements and eliminate the scope for resource hoarding by a few successful bidders.