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Delay in iron ore mines auction may affect India’s steel production: Ind-Ra

22 May 2019 Evaluate

Rating agency India Ratings (Ind-Ra) in its latest report has cautioned that steel production in India may be significantly affected if the auction of the mines is delayed. Consequently, it said the credit profile of merchant miners and thus non-integrated steel players could come under stress. It noted that the license of about 288 merchant mines will expire by March 2020, out of which 59 mines are under operations. It also highlighted that majority of these 59 mines are iron ore mines situated in Odisha and Karnataka with about 85 million tonnes of approved annual capacity.

Rating agency estimates that around 60 million tonnes of the actual production of iron ore from these mines could be disrupted. Considering that the auction process on an average takes three to six months to complete, it said a delay in initiating them until the latter half of 2019 due to the Lok Sabha elections in the country could affect the timely auction of mining lease.

According to the report, auction to operation process also gets elongated typically due to delays in obtaining environmental, wildlife and forest clearances. It said that the G2 resource prospection is a pre-requisite for auction which some of these mines may not have at the moment. The report assumes importance as India is aiming to reach a crude steel production capacity of 300 million tonnes by 2030-2031.

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