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  • Auctioning only for new iron ore leases
    Goa Chief Minister Manohar Parrikar on Saturday said that the government will resort to auctioning of new iron ore leases,if at all, in the future.Responding to a question over legality and prudence of his decision to go for renewal for iron ore leases, Mr. Parrikar, at a press conference reiterated that he was going by the provisions of Section 8(3) of the Mines and Minerals(Development and Regulations) Act, 1957 and that a maximum 50 leases would be renewed by the government.He said that people have to understand that many mining firms had heavily invested in this business over the years.Mr. Parrikar sought to explain the difference between leasing of coal mines on auction basis and Goa’s iron ore mining leases.He admitted that the Supreme Court has held that all mining leases in the State of Goa had expired in 2007. Consequently, no mining operations can be carried out until renewal or execution of mining lease deeds by the State Government.However, tracing the history of Goa's mining, he said that as back as in 1929, the first mining concession was granted in Goa by erstwhile Portuguese. While in 1987, 595 mining concessions were converted into leases as per Mining Concessions Abolition Act and lessees were given time of 18 months for first renewal. During the second renewal in 2007, only one lease was renewed by the State Government and rest of the leases were operating on deemed permission, which have been struck down by the Court.While there are only around 80-85 operative mines in Goa, the government from time to time had cancelled around 369 leases. He did not rule out the possibility of the government reviving some of these and resorting to auctioning if they are to be leased out.As for the present, he reiterated that those of the leases which have no major violations only will be renewed.He, however, cautioned that all this will be guided by the Supreme Curt imposed cap on extraction of ore to 20 million tonnes annually or the State, which also would mean cap for individual lease, to be prescribed by the government.

  • Mining rules tweaked to prevent backdoor entry of private players
    In a bid to bar the backdoor entry of private players into the mining sector, the Union mines ministry has issued fresh guidelines stating that public sector undertakings (PSUs) cannot transfer mines to their private joint venture partners."Under no circumstances should the control or majority ownership of the joint venture be transferred to the private party," stated the revised guidelines issued by the mines ministry on the submission of mineral concession proposals on October 31.According to the guidelines, if a PSU wants to enter into a joint venture, it will have to select its partner through competitive bidding process.
    "This is done to curb the backdoor entry of private players through joint ventures. Earlier, the PSUs used to get a mine through special dispensation. When there was a transfer of ownership, the benefit used to get passed on to the private player, which was unfair," explained a ministry official.On September 24, the Supreme Court had cancelled coal-mining allocations to state government entities on the ground that the operations had been passed on to private companies, amounting to commercial mining, which was not permitted under the Coal Mining Nationalisation Act.According to the guidelines, the mining lease will be allotted only when there is evidence to show that the area has mineral contents that have been established. "To carry out mining operations… mining plan can be prepared only if mineralisation is established as 111 (proven mineral reserves), 121 (probable mineral reserves), 122 (probable mineral reserves) categories as per UNFC (United Nations Framework Classification) 1997," said the guidelines.Mines Minister Narendra Singh Tomar said: "These measures are a step towards bringing transparency in the sector."According to the ministry official, non-notified area is the biggest problem in allotting mining lease or prospecting licence. However, this has been addressed through the revised guidelines, which state there should be prior notification of all the areas available for mineral concession. If the state government fails to notify the area, "the central government will consider the proposal only if strong and compelling reasons for not notifying the area is indicated by the state government, which is demonstrated to exist".This, in a way, means we will not entertain non-notified areas," said a source.The guidelines also state that once the government gives prior approval to a proposal for granting a prospecting licence or a mining lease, the state government should issue the grant order within a month."This should be done without any delay, preferably within one month of receipt of prior approval from the Central government. Delays in execution of mineral concessions agreement should be avoided," the guidelines noted.

  • Sical to convert iron ore port terminals for other cargoes
    Coffee baron V G Siddhartha-backed logistics provider Sical said that the ban on the export of iron ore has impacted its iron ore terminal at Ennore. The terminal, though was complete in all respects, however could not commence its commercial operations. The company invested around Rs 540 crore on this project.Addressing the shareholders of the company recent, company's elected Chairman R Ram Mohan said that the iron ore terminal at Ennore is complete in all respects, however it could not commence its commercial operations due to the ban on export of iron ore in the country.He added that the investment of around Rs 540 crore in this subsidiary is yet to yield any financial returns. Apart from this, an amount of Rs 4 crore per month is required to service the principal, interest and other expenses.To make the investment productive, the company has approached the management of Kamarajar Port at Ennore to let the terminal handle coal for TNEB units. "The Port Board has in-principle considered the proposal favourably and the company now awaits final approval from the ministry," said the company's chairman, adding that once the terminal is put to use it would support the company's growth plans.The company is also facing similar issues at the Mangalore Port where it has invested in an iron ore handling facility. To complete the project, the company has approached the port authorities seeking its permission to handle multiple cargoes.Speaking at the Tuticorin Container Terminal, he said, the container terminal at Tuticorin set up in association with PSA, has been improving its performance but has been impacted due to a pending resolution of policy issues relating to the tariff and royalty.On new projects, he said, the company's rail division was planning a railway terminal at Bangalore and Chennai which are in progress and the company is consolidating the land parcel at these locations and obtaining inter-ministerial committee approvals.On the performance, he said 2013-14 was yet another year of consolidation. Consolidated revenues stood at Rs 842 crore, up 10.6 per cent compared to last year when it reported Rs 761 crore revenue.

  • Mining lease no hurdle to Posco project
    Gaining mining rights over the prized Khandadhar iron ore deposits is no bottleneck for the 12 million tonne steel project proposed by Posco India with the state government ready to furnish its compliance soon to the Centre.There is no issue with the mining lease and it should not be seen as any hurdle to the Posco project. We had already recommended the Khandadhar mining lease in favour of Posco India. Now, the Centre has asked us to submit two separate proposals, one for the notified area and other for the non-notified area of the lease. We are working on it and will send our compliance soon", said a top state official.In March this year, the state government had recommended grant of PL over 2500 hectare (ha) area in Khandadhar mines in favour of Posco. Of the total area recommended, 650 ha belonged to non-notified areas, or the area which was not recognised by the state government as mineral bearing site.Uncertainty in securing a mining lease and row over land acqusition had pushed the Posco project, the country's biggest FDI, to the brink of delay. The project cost was originally estimated at Rs 52,000 crore in June 2005 when the South Korean steel giant entered into a MoU (memorandum of understanding) with the Odisha government.Notwithstanding the inordinate delay, Posco India today said it had no plans to pull out of the Odisha project unlike its bigger revival ArcelorMittal. In July last year, the world's biggest steel player, ArcelorMittal announced withdrawal from its proposed 12 million tonne steel mill in Odisha, citing resistance to land acqusition, delay in allocation of iron ore mines and law & order issues."We would not quit. No, never. We have been waiting (for the project) for 10 years", said Gee Woong Sung, chairman and managing director (CMD), Posco India after emerging out of a meeting with state chief secretary G C Pati.The Posco India CMD also met Vishal Dev, industries secretary cum CMD of Odisha Industrial Infrastructure Development Corporation (Idco). Dev could not be reached for comments on the matter.

  • 7 companies to lose coal output of 20MTPA in India
    Naveen Jindal-owned Jindal Steel & Power (JSPL), Mr Kumar Mangalam Birla-promoted Hindalco Industries, Manoj Gaur's Jaiprakash Power and Sanjiv Goenka-led CESC are among the seven firms that will lose access to their producing coal blocks after the Supreme Court's landmark judgment on Wednesday to cancel 214 of the 218 coal blocks, terming their allocation 'illegal'.The other companies that will lose their producing coal assets include Monnet Ispat, Prakash Industries and Usha Martin. These seven companies lose a combined coal mining capacity of over 20 million tonnes per annum.
    On expected lines, the stock markets fell 215 points in mid-day trades after news of the SC verdict came out, before ending flat. Some of the biggest losers were steel and metal stocks. As much as INR 4 lakh crore ($66 billion) worth of investments in developing coal mines, steel and power units are at stake.The biggest loser is JSPL as it will have to part with Gare Palama 1, 2 and 3 blocks, which produce 12 mtpa of coal (see table). Hindalco Industries will lose its Talabira mine 1 with a capacity of producing 2.3 mtpa of coal.Mr Kumar Mangalam, Aditya Birla Group chairman, said that "The Supreme Court has given a judgment on the de-allocation of mines. There is six months transition time before the reallocation. Crores of investments have been made by many companies in these mines. The government will certainly have a plan in mind, clarity of which will come in a few days."
    These companies will also have to cough up royalty at the rate of INR 295 per tonne for all the coal mined from these blocks till date.Mr Amar Ambani, head of research at IIFL, said that "The impact of this verdict would be the highest on JSPL and Hindalco in the metals space."According to analysts, JSPL alone is expected to fork out INR 3,000 crore as royalty while Hindalco's burden is pegged at INR 600 crore.Mr Debasish Mishra, senior director at Deloitte India, said that the government needs to expeditiously devise the parameters of coal block bidding and start the process as soon as possible to ensure minimum disruption for affected companies.Besides Hindalco, TATA Steel, Usha Martin, JSPL, Balco, Nalco, JSW Steel and Monnet Ispat will also lose their coal mines. These companies have heavily invested in these mines and the production was likely to start soon.
  • BIFR grants temporary relief to SPS Steels
    The Board for Industrial and Financial Reconstruction (BIFR) has offered a temporary relief to troubled SPS Steels Rolling Mills by restraining its lenders from declaring the company a wilful defaulter, bankers familiar withthe development told Business Standard. 
    "SP SSteels has got a stay order from BIFR preventing us from declaring it as awilful defaulter. The company claimed that banks were taking a coercive action bynaming it a wilful defaulter. We will contest this," said a seniorexecutive with a state-run lender requesting anonymity. The steel maker had borrowed over Rs 500 crore from a consortium of eight banks. United Bank of India (UBI), one of the lenders to SPS Steels, has alreadydeclared the company, its managing director Bipin Kumar Vohra, executive director Arjun Kumar Santhalia and director Sanjukta Vohra wilful defaultersfor non-payment of dues. Bankers explained that the BIFR stay will not apply on UBI as it had declared thecompany wilful defaulter before the order was passed. "UBI declared thecompany a wilful defaulter before the order was served. Hence, it will notapply on them. But other lenders cannot declare it a wilful defaulternow," said another banker, who also chose to remain unnamed. Allahabad Bank, Central Bank of India, Corporation Bank, Indian Overseas Bank, OrientalBank of Commerce, State Bank of Hyderabad and UCO Bank have lent money to SPSSteels apart from UBI. SPS Steels started operation in 1981 in Durgapur and specialises in manufacturingof QST bars under the brand Elegant. The company's production capacity, asmentioned in its website, is estimated at 0.60 million tonne per annum.Butbankers appear confident that this relief to the steel maker will be temporary. "One bank has already declared it as a wilful defaulter. Also, the CentralBureau of Investigation (CBI) has registered a case against the company and itsdirectors for causing financial losses to another bank. We are confident thatwe will be allowed to take steps against the company to recover our dues,"said one of the bankers quoted above. Last month CBI registered a case against Vohra and others for causing an allegedloss of Rs 139 crore to Central Bank of India. The investigation agency conducted search operations at 15 places in Kolkata and Durgapur that led to recovery of 'incriminating documents'. Vohra was not immediately available for comments. His mobile phone was switched offand text messages sent to him went unanswered. Awilful default happens when a borrower does not repay his dues despite havingthe capacity. A borrower is also classified as a wilful defaulter if he doesnot repay and has siphoned off the funds or used the money for some purposeother than the one for which the loan was availed. Oncean entity or an individual is declared as a wilful defaulter, they are debarredfrom availing finance from banks and financial institutions. Lenders can also initiatelegal process, including criminal proceedings, against wilful defaulters.
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  • Lokesh Kuldeer, Esueno Technologies

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