By Bizodisha Bureau, Bhubaneswar, November 30, 2019: Iron ore supplies are all set to be stopped after the lease tenures of merchant mines lapse on March 31, 2020 affecting steel manufacturers without captive leases.

Since they depend on merchant supplies, the expiry of the leases would shut off 66 per cent of market supplies of iron ore.

The supply disruption in iron ore is expected due to the transition from existing to new lessee. This apart, the new entrants will have to get environment clearance (EC) and forest clearance (FC) among some 20 statutory approvals to continue operations.

“The demand-supply imbalance can further jeopardise the already precarious financial health of many steel companies,” official said.

Incidentally, Odisha accounts for the largest quantum of the mineral. In the last fiscal, the state produced 114 million tonnes (mt), or more than half the nationwide output of 207 mt. Odisha’s iron ore is strategically important since it primarily feeds the steel and other end-user industries, unlike Karnataka and Goa, where exports have held sway.

Odisha has issued Notices Inviting Tender (NIT) and model tender documents for 20 iron ore and manganese leases. It has also notified nine virgin or freehold iron ore blocks. For the first lot of 10 iron ore blocks, the state has received 176 bids from over 60 companies.

Leading industry bodies such as the Indian Steel Association, Federation of Indian Chambers of Commerce & Industry (Ficci), Associated Chambers of Commerce & Industry (Assocham) and Confederation of Indian Industry (CII) are learnt to have made representation to the Prime Minister’s Office to amend the Mines and Minerals- Development & Regulation (MMDR) Act to avert supply disruptions in iron ore.

One thing is clear that iron ore prices and supply balance will hinge on how swiftly these mines recommence production after expiry of their lease tenures. While the government believes the change in ownership will be seamless and swift as the new leaseholders can carry on with both EC and FC, extended by two years, the steel industry has contested this claim. Steel producers believe mere extension of EC and FC is not the right remedy as mines need an array of clearances beyond EC and FC to stay operative.