Govt Hits Back at Vedanta’s Anil Agarwal: Defends Iron Ore Auction, Calls Allegations ‘Misleading’

The Indian government has defended its decision to auction mineral blocks after Vedanta’s Chairman, Anil Agarwal, criticized the process. Agarwal had raised concerns about the rising costs of iron ore due to auctions, claiming businesses are forced to share more than 100% of their revenue with the government. He also said the number of available blocks is limited, creating a demand-supply imbalance that drives up bid prices.

In response, the Mines Ministry called Agarwal’s comments “completely misleading.” The government clarified that no mining company in India gives 100% of its revenue to the government. Instead, the auction premium is calculated as a percentage of the average price of iron ore across all mines in a state, excluding certain expenses like steel production costs.

The Ministry further explained that the contribution of iron ore to the cost of producing steel is only about 15%, meaning companies with their own mines pay a small percentage of their total steel production value as a premium. Additionally, the cost of iron ore in India, even after adding royalties and premiums, is still lower than international prices.

Since auctions were introduced in 2015, 417 mineral blocks have been successfully auctioned, with 119 of them being iron ore blocks. Currently, 34 of these iron ore blocks are operational, with more expected to start soon. The Ministry also noted that 17 iron ore blocks are currently under auction and that 60 more blocks are ready for state governments to auction.

The government emphasized that it is not accurate to say only a few blocks are available for auction.