Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Auction of Mineral Blocks in Odisha

Responses to Queries
on
Tender Documents
(Notice Inviting Tender dated February 23, 2018)

Phase - IV

Directorate of Mines
Government of Odisha

April 05, 2018

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

1. Tender Document Refer to clause 2.20 of the Tender Document, which states
Clause 2.2: “Specified End Use Plant” shall mean a plant engaged in the
“Specified End Use Plant” shall mean a plant engaged in the production of iron and steel owned by the Bidder and located in
production of iron and steel owned by the Bidder and located India.
in India.

Clarification Required
(i) Whether a bidder having integrated steel plant will be
eligible to participate in auction?

(ii) Whether independent Sponge Iron Plants will be eligible to

participate in auction?

(iii) Whether specified end use plant owned by Bidder includes

a specified end use plant owned by a subsidiary company of
the bidder, in which the Bidder holds more than 51%?

Suggested Text for Amendment, if any

It is recommended to use the phrase, "Integrated Steel plant"
instead of "iron and steel plant" as per Schedule II of the
Mineral Auction Rules 2015.

Rationale for Clarification or Amendment

To have clarity on the issue
2. Tender Document
Clause 3.5:
[Pursuant to sub-rule (3) and sub-rule (4) of Rule 6 of the
Auction Rules, the State Government reserves this Mineral
Block for Specified End Use. The minerals extracted under the
mining lease shall:
i. be utilised solely for the Specified End Use; and
ii. not be sold or transferred or otherwise disposed of, either
As per sub-rule (4) of Rule 6 of the Mineral (Auction) Rules, 2015
and Mineral (Auction) Amendment Rules, 2017:
Where the State Government reserves a mine or mines for any
particular specified end use, the minerals
extracted under the mining lease shall, -
(i) be utilised solely for the specified end use; and
(ii) not be sold or transferred or otherwise disposed of, either

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

directly or indirectly. directly or indirectly.
Provided that quantity of mineral equivalent to twenty five per
cent of total mineral excavated in the previous financial year, Provided that quantity of mineral equivalent to twenty five per
for which end use was specified can be sold in the current cent. of total mineral excavated in the previous financial year,
financial year. for which end use was specified can be sold in the current
financial year.
Clarification Required
In case some quantity of the mineral extracted during previous
financial year remains unutilised, even after disposal of 25%
thereof in the current financial year, what will happen to such
unutilised quantity of mineral of the previous financial year?

Rationale for Clarification or Amendment

Clarity on the issue is required so as to ensure minerals do not
remain unutilized
3. Tender Document Refer to clause 2.20 of the Tender Document, which states
Clause 3.5 “Specified End Use Plant” shall mean a plant engaged in the
production of iron and steel owned by the Bidder and located in
Clarification Required India.
Whether independent Sponge Iron Plants and Pellet Plants
selling Sponge Iron & Pellets will be eligible to participate in
auction?
4. Tender Document Eligibility criteria and bid security amount is not mentioned in
Clause 5 Blank Tender Document. Eligibility criteria and bid security is
mentioned in Block Specific Tender Document.
Clarification Required
We would like to request you to kindly let us know the
eligibility criteria and the Particulars of Bank Guarantee for the
respective Blocks.

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

5. Tender Document As per the tender document. Bidders are required to meet the
Clause 5 (b) eligibility conditions including the net worth requirement, as
stated in the block specific tender documents individually.
Clarification Required
In case both the blocks are allotted to a single bidder, what
should be the net worth requirement of the bidder?
6. Tender Document The Mineral (Auction) Amendment Rules, 2017 stipulate that
Clause 5 (b) the Net worth shall be the sum of paid up share capital and the
free Reserves as per the audited Balance Sheet of the financial
Clarification Required year ended immediately preceding the date of issuance of
Whether a Joint Venture company is allowed to participate in a notice inviting tender.
bid? If yes, then can bid on the strength on its JV partners?
7. Tender Document As per tender document
Clause 6.3. The Bidders who have purchased the Tender
Document shall be eligible to visit the Mineral Block. The site
visit to the Mineral Block shall be conducted with prior notice
to the State Government through the following e-mail address
directormines1@orissaminerals.gov.in. The email should
clearly bear the following subject line: “Site Visit for
Purheibahal Block”.

Suggested Text for Amendment, if any

It is suggested that State Govt. organize site visit on a
particular date inviting all the bidders as was conducted by
Jharkhand Govt. for their iron ore block recently.

Rationale for Clarification or Amendment

Site visit organized by State Govt. would be more effective and
many of the queries can be answered on the spot

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Sr. No. Query Response

8. Tender Document
Clause 8.2. The mining lease shall be for minerals found in the
area pursuant to exploration prior to the e-auction:
Provided that where, subsequent to the e-auction, any new
mineral is discovered, then the holder of mining lease shall
follow the provisions of the Act and the rules made
thereunder‟ for inclusion of such new mineral in the Mining
Lease Deed. It is clarified that:
i.)Where, subsequent to grant of a mining lease, one or more
new major minerals are discovered, the percentage of value of
mineral despatched as quoted by the Successful Bidder under
sub-rule (3) of rule (8) of Auction Rules read with the terms
hereof shall be applicable for the purpose of payment to the
State Government in respect of each such mineral.
Major Mineral:
As per sub-rule (4) of Rule 6 of the Mineral (Auction) Rules, 2015
and Mineral (Auction) Amendment Rules, 2017:
Where the State Government reserves a mine or mines for any
particular specified end use, the minerals extracted under the
mining lease shall, -
(i) be utilised solely for the specified end use; and
(ii) not be sold or transferred or otherwise disposed of, either
directly or indirectly.
Provided that quantity of mineral equivalent to twenty five per
cent. of total mineral excavated in the previous financial year,
for which end use was specified can be sold in the current
financial year.

ii.)Where, subsequent to the grant of mining lease, presence of Minor Mineral:

minor mineral is established or discovered, the percentage of Further, the minor minerals may be treated as per Odisha Minor
value of mineral despatched as quoted by the successful Mineral Concession Rules, 2016.
bidder under sub-rule (3) of rule (8) of Auction Rules shall
inter-alia be applicable for the purpose of payment to the
State Government in respect of each such mineral. The value
of mineral despatched in case of minor mineral(s) shall be
calculated based on the sale price of the relevant minor
mineral as published by the State Government. Further, the
mining lease in respect of such minor mineral(s) will be
executed separately by the State Government.

Clarification Required
(a) In case new mineral (major or minor) is discovered later on,
whether end use criteria would be applicable for newly
discovered major or minor mineral?

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Sr. No. Query Response

Rationale for Clarification or Amendment

Criteria of end use restriction shall not be applicable for newly
discovered major or minor mineral.
9. Tender Document As per IBM published prices for the corresponding time period.
Clause 9.1 ii

Clarification Required
Sale price of the mineral (grade-wise for Orissa) as published
by Indian Bureau of Mines for such month of despatch.

Rationale for Clarification or Amendment

IBM provides grade wise average sales of iron ore for major
iron ore producing states in India. Since now monthly
payments by successful bidder would be linked with selling
price, it is suggetsed that IBM may be requested to tabulate
prices for every 1 % increase in Fe %, starting from lowest Fe
% present in the mines being put up for auction.
10. Tender Document The stamp duty on the MDPA and Mining Lease shall be payable
Clause 10.4 in accordance with the provisions of the Indian Stamp Act, 1899
as applicable to the state of Odisha.
Clarification Required
a) How much Stamp duty is to be paid during the execution of
MDPA or ML
b) Methodology for calculation of Stamp Duty and Registration
Fee may please be shared.

Rationale for Clarification or Amendment

Will help in estimation of project economics

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

11. Tender Document The Mineral (Auction) Amendment Rules, 2017 stipulate that no
Clause-11(Time Table) Mining Lease Deed shall be executed on expiry of a period of
Mine Development three years from the date of the letter of intent, and the letter
Agreement (MDPA) to be executed of intent shall be invalidated leading to annulment of the entire
between State Government & Successful process of auction:
Bidder upon obtaining all consents,
approvals, permits, no-objections from Provided further that the State Government may allow a further
Various period of two years for execution of the Mining Lease Deed if
agencies/departments required the reasons for delay were beyond the control of the preferred
applicable laws for commencement of bidder.
mining operations.
T2 + 4 months

Clarification Required
Please clarify whether only 4 months will be given for
execution of MDPA after being declared as successful bidder as
is evident from the time table?

Suggested Text for Amendment, if any

It can be made T2 + 2 years 4 months

Rationale for Clarification or Amendment

Four months’ time is very less considering the fact that
successful bidder has to take requisite approvals & consents
like EC, FC & land acquisition, water etc from the respective
authorities which takes long time.
12. Tender Document As per tender document
New Clause - Penalty for delay

Clarification Required
Suitable clause to be inserted to exempt successful bidders
from any penalty for the delay in operationlising the mine, due

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

to delay beyond control of the successful bidder like delay in
getting approvals , clearances etc

Rationale for Clarification or Amendment

Suitable clause to be inserted to exempt successful bidders
from any penalty for the delay in operationlising the mine, due
to delay beyond control of the successful bidder like delay in
getting approvals , clearances etc.
13. Tender Document No

Clarification Required
For any reason, like eco sensitive forest zone related to Forest
Clearance & carrying capacity limitations related to
Environment Clearance are not provided to us. Whether, the
expenses incurred by us for availing the mining lease will be
refund to us?
14. Tender Document As per sub-rule (2) of rule 11 of the Mineral (Auction)
Clause (MDPA) 7.1.2 Amendment Rules, 2017, the upfront payment shall be adjusted
The Upfront Payment paid by the Successful Bidder shall be in full at the earliest against the amount to be paid under sub-
adjusted in full at the earliest against the amount payable in rule (3) of rule 8 on commencement of production of mineral as
accordance with the per cent of Value of Mineral Despatched specified in the tender document. The period of adjustment may
quoted as the Final Price Offer on commencement of also extend beyond first 5 years from commencement of
production of mineral(s). production.

Clarification Required
1) It is need to clarify that what percentage of “Final Price
Offer ‘quoted”, will be adjusted against Upfront Payment in
each year to adjust in full at the earliest.
2) If the adjustment of Upfront Payment in full extends beyond
5 years, as per above percent decided by the State Govt., from
the commencement of production of minerals, then what will
happen?

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

15. MDPA As per tender document
Schedule E - Minimum production Requirement

Clarification Required
Minimum production is linked to % of production approved as
per mining plan. What will happen, if there is a cap on
production imposed by State government.

Suggested Text for Amendment, if any

Minimum production requirement shall be % of lower of the
EC or approved mining plan or any cap in production imposed
by State Government

Rationale for Clarification or Amendment

There may be restriction on production capacity due to cap in
production imposed by State Government.
16. MDPA As per tender document
New Clause - Minimum production Rate

Clarification Required
Minimum production rate from the block shall be indicated.

Suggested Text for Amendment, if any

Minimum production rate from the block area shall be
[…MTPA] .

Rationale for Clarification or Amendment

This will ensure optimal utilisation of resource avoiding
resource blockage

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

17. General The Government of Odisha shall endeavour to provide
assistance on best effort basis.
Clarification Required
Role of State Govt. in enabling the Preferred bidder to execute
the work and get the permissions/NOC from the reportedly
trouble prone area.

Rationale for Clarification or Amendment

The area is reportedly infested with extremism activities. Some
form of Assurance to the successful bidder to create an
atmosphere for peaceful excercising of the legitimate rights.
Opposition from the locals is being experienced while
executing the work in adjoining block. Whether the concerned
distirct level departments will provide support by involving
higher level authorities
18. General Land acquisition will be the sole responsibility of the
Preferred/Successful Bidder and the Government of Odisha
Clarification Required may, in its sole discretion, provide assistance regarding
Will the State Government acquire Land for the Lessee under acquisition of land as per law.
the State LARR Act, 2015 within the stipulated time frame?

Rationale for Clarification or Amendment

Without Land acquisition and transfer of surface rights, Mining
is not feasible.
19. General The surface right have to be obtained before the
commencement of the mining operation in the land concerned.
Clarification Required However, the approval under the F.C Act have to be obtained
Whether acquisition of the ST Land is pre-requisite for grant of prior to grant /execution of lease.
mining lease and its execution or can be done after the
execution?

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 Odisha Mineral Blocks Auction (Phase – IV) – Responses to Queries

Sr. No. Query Response

20. Land Schedule
Detailed Land Schedule of the proposed ML Area
Clarification Required
Will the State Government acquire Land for the Lessee under
the new Land Act within the stipulated time frame?
Land acquisition will be the sole responsibility of the
Preferred/Successful Bidder and the Government of Odisha
may, in its sole discretion, provide assistance regarding
acquisition of land as per law.

Rationale for Clarification or Amendment

Most of the lands are in the ST category

April 05, 2018 Page 11 of 11