The Mines Ministry reinforced its support for auctioning mineral concessions . This move comes after Vedanta Chief Anil Agarwal questioned the decision to conduct auctions for iron ore mines, claiming that input costs have gone up due to this approach. In statement issued late Friday, the Ministry termed Agarwal’s comments as ‘completely misleading.’ "No mining company in India shares 100% of company revenue with the Government! The auction premium paid by a company is a percentage of the average of the ex-mine prices of iron ore produced by all the mines in a State, excluding the expenditure made by the company outside lease boundary and on value addition for steel production,” the ministry said while adding that auction premium is not paid out of total revenue of the company. Earlier in the day, Agarwal had posted on social media, “Could you run a business successfully if you have to share more than 100% of your revenue with another party?... The bid is based on how much revenue you will share with the government. Since auctions were introduced, the average for iron ore is 118%.” He also said there are limited blocks are on offer. “Many steel manufacturers seek raw material security, there is a huge demand-supply mismatch and bid prices become massive,” Agarwal said. FinanceA2Z Of MoneyBy - elearnmarkets, Financial Education by StockEdgeView Program StrategySuccession Planning MasterclassBy - Nigel Penny, Global Strategy Advisor: NSP Strategy Facilitation Ltd.View Program MarketingModern Marketing Masterclass by Seth GodinBy - Seth Godin, Best-selling authorView Program FinanceFinancial Reporting and AnalyticsBy - Dr. C.P. Gupta, Professor: Department of Finance and Business Economics, University of DelhiView Program LegalData Privacy with General Data Protection Regulation (GDPR)By - Arun S. 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So, in case of a steel company which uses iron ore produced from its own mine, it pays only a small percentage of total value of steel produced as auction premium to secure assured supply of iron ore for running its steel plant.” It added that prices of iron ore produced in India are lower than the prices in international market. “Even after payment of royalty and auction premium, the iron ore price in India are competitive as compared to the international market. Royalty and premium are part of cost of production for the company and not something shared out of revenue/ profit!,” the Ministry added. Sharing details of mines auctioned till date, the Ministry said, “Since the introduction of auction in the Mines and Minerals (Development and Regulation) Act, 1957 in 2015, 417 blocks have been successfully auctioned. Out of 417 auctioned blocks, 119 are iron ore blocks. 34 auctioned iron ore blocks have already been operationalised.” According to the centre, another 21 blocks are expected to become operational in near future. Besides, 17 iron ore blocks are under auction process and 60 iron blocks handed over by the Ministry of Mines are available with the State Governments for auction. “It is therefore wrong to say that only limited blocks are on offer,” the ministry said. (You can now subscribe to our Economic Times WhatsApp channel) (You can now subscribe to our Economic Times WhatsApp channel)
