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India: Fomento chooses not to re-bid for Nadidih in Odisha auctions

Last month, the Odisha High Court allowed Sociedade De Fomento Industrial Private Limited to participate in the re-auction of the Nadidih iron ore block, one of the 11 to...

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16 Sep 2021, 13:39 IST
India: Fomento chooses not to re-bid for Nadidih in Odisha auctions

Last month, the Odisha High Court allowed Sociedade De Fomento Industrial Private Limited to participate in the re-auction of the Nadidih iron ore block, one of the 11 to be auctioned over the next fortnight.

The Goa-based miner had offered the highest premium of 141.25% of the sale price when the block was first auctioned in early 2020.

Two days after it was issued a Letter of Intent (LoI) on 18 Mar'20 recognising it as the highest bidder, the Centre amended the Mineral Auction Rules of 2015. This amendment specifically incorporated Sub-Rule (6B) to Rule10 of 2015 allowing the state governments to revoke the performance security and any upfront installment paid if the holder of the LoI did not comply with the requirements to execute the lease. The state could, at its discretion, also bar the company from future auction of mineral blocks.

Fomento never executed a lease, however, objecting to being asked to meet a minimum production target (a concept it claimed was introduced after the auction process had begun) and which if forced to meet would lead to exhaustion of the reserves before the lease term expires. While its challenge to the MDPA remains undecided, Odisha has gone ahead and re-tendered the iron ore block in Koira of Sundargarh district and barred Fomento from bidding for it.

The High Court, in its 17 Aug'21 order, finding fault with the state government's failure to send the company a specific show cause before debarring the company, directed the state to allow Fomento to participate in the auction. Industry sources said that while the company did buy the tender document for Nadidih, it has decided not to bid for the deposit.

 

 

16 Sep 2021, 13:39 IST

 

 

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