Molybdenum mine auctions face hurdles due to lack of policy framework

Molybdenum can withstand extreme temperatures without significantly expanding or softening, so it is used in manufacturing military armor, aircraft parts, electrical contacts and industrial motors.

Written by Deepak Patel | New Delhi | Published: May 16, 2018 12:57:05 am
Odisha: College principal arrested for instigating villagers against bauxite mining Vellampatti South, Marudipatti Central and Mannadipatti Central are the three Molybdenum mines in Tamil Nadu that are ready to be auctioned by the Tamil Nadu government. (Express Photo by Ruhani Kaur/Representational)

Tamil Nadu is unable to move ahead with the auction of Molybdenum mines as the mineral’s royalty rates are not specified in the Central government’s mining law and its average sale price has not been published by the Indian Bureau of Mines (IBM). The country has never auctioned any Molybdenum mine so far.

The IBM works under the mines ministry. Non-coal mining auction rules allow the state government to use the all-India average sale price of the IBM as a benchmark for auctions if the state’s average sale price is not available. “We do not have the an average sale price of our own as we never auctioned or allotted any Molybdenum mine before. So, we need the IBM to publish an average sale price so that auction can begin,” said a senior Tamil Nadu government official, on the condition of anonymity.

Molybdenum can withstand extreme temperatures without significantly expanding or softening, so it is used in manufacturing military armor, aircraft parts, electrical contacts and industrial motors. The official added that the royalty rates need to be specified before the auction so that the bidders have “complete knowledge” to make a proper decision. “The bidder must know the royalty rates so that he can make his calculations and check whether mining would be viable for him or not. He can then put his bids accordingly” the official said. Royalty rates are defined under Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957. This law is administered by Ministry of Mines.

Last month, this issue was also raised in the second meeting of the study group that has been formed by the Ministry of Mines to revise royalty rates and dead rent for non-coal minerals. State governments also participated in this meeting that happened in New Delhi on April 10. According to the minutes of this meeting, K Vivekanandan, Director, Department of Mines and Geology, Tamil Nadu, informed that “Molybdenum blocks have been identified in the state and ready for auction but the rates of royalty for Molybdenum is not specified in the Act and the sale price for Molybdenum is also not published by the IBM”.

According to a source privy to the development, Vellampatti South, Marudipatti Central and Mannadipatti Central are the three Molybdenum mines in Tamil Nadu that are ready to be auctioned by the Tamil Nadu government. “Two of these mines have low reserves of Molybdenite – each having around 30000 tonnes. However, the third one has been found to be having around 3 million tonnes,” he added. Molybdenite means Molybdenum Disulfide.

According to the new Mines and Minerals (Development and Regulation) Amendment Act, 2015, state governments have to auction their non-coal mineral mines through a two-tier forward-bidding process. Before this Act, mines were handed out to miners on discretionary basis by the state governments. Molybdenite is the principal ore of Molybdenum. About two-thirds of global Molybdenum production is as by-product of copper mining and only about one-third is obtained from primary molybdenum mines. In India, by-product concentrates of Molybdenum are produced intermittently from uranium ore of Jaduguda mine belonging to Uranium Corporation of India Ltd (UCIL) in Jharkhand. India’s internal demand for Molybdenum and its products is met mostly through imports.

As per the UNFC (United Nations Framework Classification for Resources) System — as on April 1, 2010 — Molybdenum ore in India are estimated at about 19.29 million tonnes. These ore resources are located in Tamil Nadu (9.97 million tonnes), Madhya Pradesh (8 million tonnes) and Karnataka (1.32 million tonnes).

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