Bhubaneswar: Odisha government’s decision to auction two chrome ore mines lapsing on 31 March 2020 but not Tata Steel’s Sukinda mine has the ferrochrome industry worried.

Ferrochrome is a key ingredient in the production of stainless steel. Neither the players, dependent on these mines, nor Tata Steel which both sold and consumed chrome from the mine is happy with the state government’s decision.

Bids have been invited for Misrilall Mines’ Saruabil mine and B C Mohanty’s Kamarda mine, two of the three deposits lapsing in seventh months. On the other hand, Tata Steel’s Sukinda mine is being recommended for reservation for state-owned Industrial Development Corporation of Odisha, IDCOL. ET has learnt that this may not be the government’s final decision.

These leases are among the hundreds of merchant mines lapsing on 31 March 2020 under the 2015 amendment mandating auction of mineral resources. The auction of these chrome mines, preceding those of nearly 30 iron ore mines in the pipeline, marks the difficult transition mineral based industries, and Odisha, will have to make to avoid a disruption in supply of ore next year.

India has 3-4 per cent of the world’s chrome ore reserves, 97 per cent of this lies in Odisha’s Sukinda valley. Along with the state-owned Orissa Mining Corporation (OMC), the three mines catered to 0.7 million tonne capacity of ferrochrome, or almost half the country’s 1.4 mt annual capacity. (Balasore Alloys, Indian Metals and Ferro Alloys and FACOR have captive mines with rights till 2030.)

“There are too few mines to allow equitable distribution, auctioning them would lead to hoarding of chrome ore by a few,” argues the All Odisha Steel Federation representing companies such as Visa Steel.

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“At the current available rate of chrome, ferrochrome players are struggling to make profits. A further increase in raw material prices will shut down those without a captive mine. The Indian ferrochrome industry is already under tremendous pressure with China in the recent past increasing its capacity to more than 5 million tonnes, and continuing to add capacity,” said Ranjan Misra, a director at BC Mohanty and Sons. Let a state entity mine and auction ore, as OMC already does for chrome and bauxite, he suggested.

Prafulla Ghadai, Vice President of the Biju Janata Dal and an influential trade union leader of the region, has made a similar request to the CM. At their current rate of productions, these mines with combined reserves of 60 mt would last another 60-70 years, but if auctioned would be exhausted in 30-40 years, the former finance minister claimed in his letter.

Tata Steel however believes there is no justification for reserving any area for a state entity, given OMC’s track record.

In February, the additional secretary, steel and mines department had sought details of Tata’s mine. “…it has been decided by State Government to request the Ministry of Mines, GoI to accord approval for reservation of the Sukinda Mining block area of 406 hectares for chrome ore…in favour of IDCOL which is a company owned and controlled by the State Government, for mining purpose under Section 17A(2) of the MMDR Act,” explained the 2 Feb 2019 letter to the Director Mines.

Originally granted in 1973, the open cast mine, operated both as captive and merchant lease, is now almost 120 metres deep. Converting it into an underground mine could cost at least Rs 7000 crore. Tata Steel would nonetheless like to bid for and retain the mine, said a senior executive who didn’t want to be named. “Of the 5300 ha of chrome ore leased out, OMC holds 3899 ha or 74 per cent of the area. With environmental clearances of 41 lakh tonnes, it only produces 9.8 lakh tonnes, or 29 per cent of the total chrome ore produced in the state. While Tata Steel, holding 9 per cent of total area, accounts for 35 per cent of total production,” said the senior company executive.

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