Birla Group wins bid for Chhatarpur diamond mine; Madhya Pradesh to fetch 41.55% revenue of sale price

BHOPAL: Essel Mining, a closely held Aditya Birla Group firm has won the bid for Bunder diamond mines in Chhattarpur district of Madhya Pradesh. The online bid for the mine of Buxwah was released on Tuesday morning. The government had fixed the offset price of Rs 56,000 crore for this mine, but the maximum rate of offset prize was increased by 11.5 per cent due to the presence of well-known companies in the competition.

After coal, this is the single largest allocation of natural resource in the country under the new auction regime after the coal scam of 2015. The NDA govt has introduced transparent allotment system by auctioning. This is the single largest allocation of natural resource by any state or centre, said sources in the mining department.

The Bunder diamond mine in Chhatarpur has reserves of around 34.30 million carats of diamond. The 50 year lease is for 374 hectare of forest land for wich the government has already earmarked land for compensatory afforestation, according to the mines ministry.

During the process, a 24-hour time was fixed for the final bidding, in which competition between Adani, Birla and Rungta over the diamond mine witnessed the highest bidding. On Tuesday evening, the bid reached 22.50 per cent more than the offset prize. The auctioning of the mine would fetch huge revenue to the state government.

"Bidding for the mine completed Tuesday evening and Birla group (Essel Mining) won the bid after 11 hours of marathon online bidding process against Adani Group. The Base royalty was fixed at 11.50% while, the auction premium was finally closed at 30.50%. The state government will get a total 41.55% of sale price of the all the diamonds from the mine," state mining minister, Pradeep Jaiswal told TOI.

He said Chhatarpur's hitherto unusable mine will not only generate employment for the youth of Bundelkhand and other regions but also generate huge revenue. "We have received five time more revenue and after two years the government will get Rs 1200 to 1500 crores as revenue. This is a result of the new mining policy framed by chief minister Kamal Nath,' Said Jaiswal.

In order to participate in the auction, one of the country's largest mine, a security amount of about Rs 56 crore (10%) was to be deposited as per the Government of India (GoI) rules. For this, the net worth of the applicant company was required to be at least Rs 1100 crore.

The technical bid of these companies was completed by November 27, after which online bidding began by opening initial price. The Bunder diamond mine was run by Rio Tinto from 2007 to 2010 but it left the mine following a dispute with the state government.

As many as five companies had participated in the bidding for the Bunder diamond mine. National Mineral Development Corporation, Essel Mining (Birla Group), Chendipada Kolari of Adani Group, Vedanta Group and Rungta Mines Limited had expressed their interest and bid for the diamond mine, worth Rs 55,000 crore.

On Wednesday, the department of mining resources issued the invitation letter to Essel Mining requesting to deposit 10% of the performance guarantee which amounts to Rs 27 crore, after which Letter of Intent (LoI) will be issued.

The government also plans to auction mines of limestone, base metal, bauxite and graphite, it said. According to the latest data, the government has so far auctioned 68 mineral blocks which are likely to accrue estimated revenue of Rs 1.99 lakh crore to the state government over a period of 50 years.