Odisha likely to hike iron ore production cap

KOLKATA (miningweekly.com) - With iron-ore miners, including the provincial government-owned and -managed Odisha Mining Corporation (OMC), planning to hike production despite a glut, the Odisha government is considering hiking the production cap from noncaptive mines for the next fiscal year.

As iron-ore production in 2015/16 was expected to touch the 70-million tonne mark, increasing the annual cap on production from the eastern Indian province was necessary to offer a window for miners to maintain or increase production from their respective mines, a state government official said.

The exact quantum of the hike in cap would be determined by the provinces’ Directorate of Mining (DMG), but indications were that it would be around 80-million tonnes for 2016/17, compared with the 70-million tonnes set for 2015/16, the official said.

Citing examples, he said that OMC, which would produce about 6.5-million tonnes of ore at the end of the current year, would mine an estimated 10-million tonnes next year, through greater mechanisation and optimal use of ore handling infrastructures at the mines it operated.

It was also pointed out that over 100 iron-ore mines were still closed following the Supreme Court order that deemed the extension of mining leases under which these had been operating illegal.

The Odisha government was working toward regulating the mining leases of these closed mines but the production cap from the region would have to be pushed up if these mines were to get back into production, the official added.

Meanwhile in a related development, the Odisha government was not expected to put any more iron-ore reserves up for auction before August or September, considering the weak response from prospective investors among steel producers and the opportunity to increase production from existing mines even though raw material supplies were expected to be in glut in the medium term, the official said.

Odisha had identified ten iron-ore reserves for allocation through auction. However, it had only put up one iron-ore reserve for bidding. Seven steel companies, including Essar Steel, JSW Steel Ltd, Jindal Steel and Power Limited, Bhushan Steel Limited, Bhushan Power and Steel Limited, Rashtriya Ispat Nigam Limited and Tata Steel, were currently part of the ongoing bidding process.