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Govt to auction 20 major iron ore mines this year to revive mining industry

26 Aug 2015 Evaluate

In a bid to revive mining industry, the government is planning to auction about 20 major iron ore mines this year in its first such sale ever. This move will help to curb wrongdoing and is expected that mine sales will bring India closer to its target of tripling the steel capacity to 300 million tonnes by 2025 and relying less on ore imports, however it is unlikely to lead to an immediate boost in iron ore output at a time when there is a global glut. 

In the last financial year, India had produced 136 million tonnes of iron ore. About 1.5 million tonnes of ore are needed to make 1 tonne of steel, implying India's ore output will have to more than triple in 10 years if steel companies are to be self sufficient.  Most of the iron ore mines being sold are in the southern state of Karnataka, known for its high-quality ore. This will greatly benefit local steelmakers like JSW Steel. Led by JSW's purchases, country’s ore imports hit a record of over 15 million tonnes previous financial year as global prices collapsed.

Mines Secretary Balvinder Kumar has said that Most of the states are in the midst of carrying out their pre-auction activities and hopefully by the end of October and November onwards they will start (auctions) and said that about 80 mines to be auctioned in the first phase, including limestone, gold and ‘about 20 iron ore mines, furthermore, he added that States are estimating reserves.

He further expects prices to improve by the time the mines start.  The mining process takes two to three years because they will need all kinds of clearances such as forest, environment, from pollution control board. Currently, India's mining sector has been mired in controversy over illegal allocation of resources. Once the world's third-biggest iron ore exporter, the country now imports the steelmaking ingredient on account of a court-led crackdown on illegal mining.

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