The following excerpts from a news item from tathya.in illustrates the difference between the state’s income due to only royalties and through auction.

In 2002 the IDCOL made an abortive attempt to give away the mines to Jindal Stainless at a throw away considerations ignoring higher bids by Tata Steel and Visa Industries.

The ill-conceived move by the bureaucrats was foiled by the Orissa High Court, which passed adverse comments regarding the Government of Orissa attempt to compromise public interest in the deal.

Both the State Government and IDCOL appealed before the apex court to get relief with considerable cost and time.

Supreme Court’s order for re-bidding how ever has now materialized.

To the amazement of every one Jindal Stainless which had offered a sum of Rs.38 per ton has now come up with a bid of Rs.3000 per ton for ore having 48 per cent chromium.

And on average they have offered per ton Rs.900.

Visa Industries has out bid Jindal Stainless with an offer of Rs.7000 per ton of chrome having 48 per cent of chromium content.

Even assuming the changes in the commodity prices which have taken place in last 5 years is too much than the price offered earlier.

The colossal loss to the flagship Public Sector Undertaking (PSU), IDCOL can be well imagined if the Jindal Stainless had succeeded in 2002.

Now with opening the financial bids of the participants, it underscores the point that the State Government’s Policy for leasing out the mineral resources of the state is faulty and not at all in the best interest of the state, said a financial analyst.

To take the advantage of high price in demand of metals and minerals in the international market, corporate giants and multinationals like POSCO, Arcelor- Mittal, Essar, Vedanta, Jindal, Bhusan and many others are flocking to Orissa to corner mining leases.

The State Government  … Yet they do not learn from the Tangarpada experience.

… Under the MMDR Act, mines can be reserved for the PSUs and leased out to the State owned companies like IDCOL and OMC.

These PSU can auction the mines among the credible parties after floating world tender for value addition and derive bonanza.

Till date no body knows about the “Policy of Value Addition” of the Government of Orissa.

The Policy should come up immediately and it should be implemented in letter and spirit for the interest of the state.

The positive changes of Policy will not effect industrialization, but it will give substantially higher rate of revenue to the state exchequer as demonstrated in case of Tangarpada.

The state’s entire requirement of funds for eradicating poverty and developing the state can be generated with the policy change, said a former Union Minister.

However there is no effort in this direction.

…  Instead of Centre bashing the State Government should make efforts to maximize revenue from mineral resources through PSU mode, observed a former Secretary of the Government of India.

Definitely the state can earn much more on just the minerals by leasing it to state companies like OMC and IDCOL and then letting those companies auction the mineral. The possible negative of completely following that approach, especially with respect to iron ore, is that the winner of the auction can then take the ore and set up plants in other states. If that happens Orissa will lose out on the side developments associated with plants such as infrastructure building, jobs and the tax that the state can get from the companies.

What the state should do is to try for the best of both worlds. I.e., offer other facilities and enticements to keep the companies in the state but go the route of auction. What other facilities and enticements can the state offer?  Orissa being on the coast, availability of ports nearby is an important factor and it is good that the state is working on the development of many ports and railway lines to those ports. Easy availability of land for the companies will help. More thoughts need to be put in this direction.

There is a chance that some companies will not set up shop in Orissa under these conditions; but these days there seems to be a lot of companies who want to set shop. So perhaps the time has come for the state to change its approach of leasing mines to attract companies to auctioning minerals via IDCOL and OMC and using other methods to attract value addition companies.

Following is an excerpt from a report in Times of India about this.

… “We have received a proposal from Arcelor-Mittal, requesting for an arrangement with OMC,” confirmed a senior officer. “The government is exploring the possibilities and details remain to be worked out. It could mean a long term agreement or a joint venture between the two parties,” the officer told TOI. The government, sources said, has set up a four-member committee headed by chief secretary to examine the proposal’s feasibility and chalk out the draft terms and conditions.

Sources said Arcelor-Mittal is yet to submit any application for prospecting lease or mining lease for any iron ore deposits, but evidently does not want to take chances. Hence, it has proposed a tie-up with the state-owned body to serve as a back-up. “The company would no doubt go for captive mines. The pact with OMC would ensure an alternative raw material arrangement for the company’s project,” sources pointed out. Orissa has so far inked pacts for 46 steel facilities, sparking doubts over iron ore scarcity in future.

Arcelor-Mittal, which has signed an MoU with the state government to set up a 12 MTPA steel plant at an investment of Rs 40,000 crore, is the first major player to make this kind of a proposal. Some small steel units had earlier sought to enter into raw material supply agreements with OMC, apparently to ensure a steady flow of iron ore and offset price fluctuations. Some steel plants, which have reached production stage, are buying ore from the market at higher prices, sources disclosed.

Following are excerpts on this from a report in Pioneer.

The Centre has allocated coal blocks to three companies of the State. These three companies include Orissa Power Generation Corporation (OPGC), Orissa Hydo Power Corporation (OHPC) and Orissa Mining Corporation (OMC). …

In Baitarani West Coal block, Centre has given the rights of exploration to OHPC, State Electricity Board of Kerala and Power Corporation of Gujurat. All of them have been allotted coal blocks to the tune of 200 million tonne. OPGC has got two coal blocks. It has got the Manoharpur and Manoharpur deep side coal block. It has got 532 million tonne of coals.

In the Utkal D- Coal block site, OMC has got 120 million tonne. It has also got 350 million tonne of coal blocks in the Telisahi coal block of Nuagaon.

Andhra Pradesh has also got the 350 million tonne of coal from this site. Mandakini Coal block has been distributed among the four States. Meghalaya and Assam are the important beneficiaries.

The Statesman reports on OMC’s turnover in Quarter 1. Following are some excerpts.

The Quarter-I (Q-1) turnover of Orissa Mining Corporation (OMC) during 2007-08 has reached Rs 332.04 crore, which shows a rise of 68 per cent, compared to the corresponding period of the previous year. In the corresponding period of last fiscal 2006-07, it was Rs 197.62 crore.
In the last fiscal, during 2006-07, the corporation’s turnover had crossed the four figure mark and pegged at a record of Rs 1,080 crore, with a profit of Rs 540 crore.

… The Q-1 turnovers of 2005-06 and 2004-05 were Rs 124.47 crore and Rs 117.61 crore respectively.