Bhubaneswar, Jan. 5: The state cabinet today decided to take the public auction route for allocation of all non-coal mines in Odisha. The move is likely to have far-reaching implications for the raw material-starved state industries.

The state government, which would file a leave petition in the Supreme Court in this regard, also decided to auction captive and non-captive mines separately.

The move will earn the state annual revenue to the tune of Rs 10,000 crore while opening a window of hope for the resource starved industries, specially the steel-makers, who were facing a crippling iron ore shortage.

The decision, which seems to have been inspired by the Centre's move in December last to auction the coal blocks scrapped by the Supreme Court, was hailed by chief minister Naveen Patnaikas 'historic', which would put an end to monopolistic practices and bring about greater transparency in allocation of natural resources. Chief secretary Gokul Chandra Pati said modalities of public auction would be decided within a month or two.

Barring coal mines, which number about 30 in the state, all other new mines and those pending second and subsequent renewal will be auctioned through competitive bidding.

The decision would, however, not apply to the Odisha Mining Corporation and the central PSUs. An exception would also be made where the state government has already recommended grant of prospecting licences or mining leases to the Centre in pursuance of MoUs like in the case of South Korean steel major, Posco.

The decision comes in the wake of almost wholesale closure of iron ore and manganese mines in the state following the multi-crore mining scam, which was probed by agencies, including a judicial commission headed by Justice M.B. Shah, who, in his report, has recommended a CBI inquiry into illegal mining of minerals in Odisha.

The crackdown on mines in the wake of the scam forced the closure of nearly 500 of the total 601 mines in the state as most of them were found to be working without valid papers or on the strength of the controversial deemed extension clause of the Mines and Minerals (Development and Regulation) Act.

The Supreme Court, in an interim order on May 16 last year, had called for suspension of the operation of 26 iron ore and manganese mines, which had been operating under the deemed extension clause while awaiting their second and subsequent lease renewal. The decision of the court, which, though later allowed the state government to run eight of these mines through an express order, had triggered a raw material shortage hitting the major steel-makers.

The state cabinet has made certain significant exceptions while taking the decision for auction of the non-coal mines. While mining leases awaiting approval for their first renewal would not be included in the auction, leases already issued grant orders and awaiting execution of the lease deed by the state following the Centre's approval would also be out of its purview provided that they are executed within the specified time period.

An exception will also be made in the case of mining leases that have already received express orders for renewal provided that the lease deeds are executed within the specified timeframe in tune with the statutory requirements.

An inter-departmental committee, headed by the development commissioner, would be formed to decide on cases where a doubt arises whether they fall in the exempted category.