India considers extending green permits for mines up for auctions

Aerial view of pellet plant at Paradip, Orissa, India. (Image courtesy of Essar Steel)

India is considering easing environmental approvals for mines due for auctions by March, according to people familiar with the matter, a move that may potentially limit any disruption in iron-ore supplies.

The mines department is in talks with the federal environment ministry to allow winning bidders of mines whose leases expire by March 2020 to start operations without delay if the mine has valid environmental and forest approvals, the people said, asking not to be identified as the discussions are still on. The bidders could then seek fresh permits within two years, they said.

Spokespersons at both ministries didn’t immediately respond to emails seeking comment.

Getting fresh environmental and mining permits can often take months and cause delays in resuming output. Additionally, the slow pace of auctions may also disrupt iron ore production, potentially turning the South Asian nation into a net importer of the steel-making raw material. Under a new mining policy, India is set to auction leases of 48 independent mines before March 31, according to the Federation of Indian Mineral Industries.

About 45 million tons of iron ore capacity could be affected by the expiry of the leases, one of the people said. Last week, Steel Secretary Binoy Kumar said while there is apprehension in the industry over iron ore supplies after the expiry of the merchant mining leases, “things are in total control.”

The government is aware of the challenges and if it extends the existing environmental clearances, it may reduce the supply shortfall likely next year, A.K. Prabhakar, head of research at IDBI Capital Market Services, said by phone.

“India has very good natural resources but because of the policy handicap we have had to face problems.”

(By Rajesh Kumar Singh and Swansy Afonso)

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