ArcelorMittal pointed out the gap, which allowed for multiple bids from associate companies. Now new timeline starts from December 6.
Intense competition has seen one of the biggest iron ore mine auctions in India getting delayed, with some bidders pointing out loopholes, and others defending their turf.
The Odisha government had earlier this year called for bids for 20 mines, leases of which will lapse in March next year. The auction saw bids from the likes of Tata Steel, Vedanta, JSW Steel, ArcelorMittal and JSPL. Overall, more than 50 companies had shown interest. One of the mines alone has a deposit of about 800 million tonnes.
But now the government has been forced to call for fresh auctions, after some players, including ArcelorMittal pointed out 'loopholes' in the process. A report said that the Adani Group has also complained about the same.
The loophole, said an executive from the industry, allowed JSW Steel to put in several bids through its subsidiaries. Subsequently, the state government has brought about amendments in its tendering process.
Now, "a bidder shall submit only one bid for a particular mineral block. In case, a bidder submits more than one bid...through its affiliates, all such bids...will be rejected," says a notification from the government.
The state has now announced a new timeline for the auction, which will now take off from December 6. The bids have to be submitted by January 3, 2020. Technically qualified bidders will be announced by February 19, and the announcement of the preferred bidder will be made on February 21.
While JSW Steel declined to comment, sources said that the company had only done what was permitted under the law. "There was a loophole, which has now been removed," said an official.
The slurry pipeline saga
For ArcelorMittal, the mines are important to bring down costs at Essar Steel, for which the world's largest steelmaker put in a bid of Rs 42,000 crore.
It has already got a boost, in the form of the Odisha Slurry Pipeline Infrastructure (OSPL). The pipeline supplies iron ore to Essar Steel's pellet plant in Odisha. The pellets are then taken to Hazira to be used in Essar Steel's plants.
ArcelorMittal has emerged as the highest bidder, with a bid of Rs 2,300 crore bid. Though Thriveni Earthmovers, a dominant player in Odisha's mining industry, has bid over Rs 3,000 crore, the offer comes with a few riders.
Thriveni's offer is conditional, has a low upfront cash payment, and plus the payment schedule is long-drawn.
“For lenders, who have been focused on realising maximum recovery in these insolvency cases, the upfront payment element is paramount. It is conditional on the outcome of an existing legal dispute around the title of the asset," said an executive from the industry.The turn of events will be a relief for lenders too, as things had got complicated in 2018, when Numetal - which had also bid for Essar Steel - claimed to have bought OSPL from Srei Infrastructure Fund. But the sale was disputed by the company's lenders, led by SBI, who claimed that SREI is not the rightful owner of the pipeline company.Are you happy with your current monthly income? Do you know you can double it without working extra hours or asking for a raise? Rahul Shah, one of the India's leading expert on wealth building, has created a strategy which makes it possible... in just a short few years. You can know his secrets in his FREE video series airing between 12th to 17th December. You can reserve your free seat here.