E-Paper
Odisha mining revenue shrinks amid lockdown by two-thirds in 2 months
Officials in the mining department said between April 1 and May 30, Odisha’s earning from mining was just about Rs 667 crore, about one-third than the same period of 2019-20 fiscal.
Odisha’s mining revenue has gone down by two-thirds in the last two months compared to what it was during the same period a year ago, underscoring the economic slowdown that the state is likely to face in 2020-21 fiscal.
Officials in the mining department said between April 1 and May 30, Odisha’s earning from mining was just about Rs 667 crore, about one-third than the same period of 2019-20 fiscal. Director of mining department, Deepak Mohanty said the decline in production and dispatch during lockdown has led to the decrease in mining revenue in the last 2 months.
“As the fear of coronavirus still persists in the minds of workers, mining companies could not deploy workers even though mining is among the sectors that got relaxation during lockdown. The end user industries like steel companies and sponge iron industries too slowed down manufacturing in this period. The transporters of the minerals too could not get enough trucks and labourers that contributed to decline in the entire mining operations,” Mohanty said.
A large portion of the Rs 667 crore revenue that the state earned during the last 2 months was from royalty on ores.
Though relaxations have been given to the mining sector in successive lockdowns, Odisha’s hopes of earning more revenue from the 21 mines that were auctioned 3 months ago, would have to wait at least a month before any operation can start. The 21 iron ore, chromite and manganese ore mines that were auctioned with over 105 per cent premium during the bidding, need to get a vesting order from the state mines department before starting operation.
“As the steel and mines department was not operative for a large part of the lockdown period, the new leaseholders had to wait for necessary approvals. Now that we have opened, we hope to give the leaseholders the necessary vesting orders within a month,” Mohanty said.
Early this year, there were record bids to 21 merchant blocks offered for online auctions. While JSW Steel won four iron ore mines, ArcelorMittal won the Thakurani mine, with a premium of 107 per cent. Jindal Steel & Power Ltd bagged the Guali mine after committing a premium of 144 per cent.
But the Odisha government’s hopes of earning higher revenues from mining than what it got in 2019-20 may not happen as many merchant miners may not go for full-fledged mining due to lack of demands.
In 2019-20, Odisha earned mining revenue of Rs 10,943 crore, which constituted a bulk of its non-tax revenue. Despite the slowdown in economy, Odisha hoped to grow in the range of 7 per cent to 7.5 per cent during 2020-21. However, it is likely to be drastically revised as the mining sector would not grow as much despite the auction of 21 mines.
“Many of the merchant miners are sitting on huge inventory of ore and they don’t have any idea how to dispose of the stockpile. As the demand for steel would be down in a recessionary economy, there is little likelihood of increased production of ores. So that would bring down the royalty earning for the government,” said Rajiv Lochan Mohanty, vice-president of the Eastern Zonal Mining Association.
The lack of demand from end-users is also likely to affect employment in the mining sector. “The new merchant miners will use more automation in their operations affecting employment. The existing staff in mining companies may see salary cuts so that the companies stay afloat in a recession-hit market,” said a mining department official.
