CLSA believes auctions in iron ore and bauxite could pick up pace ahead of the expiry of many private non-captive leases in March 2020.
The 2015 amendment to the Indian mining laws not only paved the way for auctioning new mines, but also stipulated that existing leases expire in a limited timeframe and these mines subsequently be auctioned, said CLSA.
The brokerage said that the last two years have seen the highest auctioning activity in limestone reserves, but limited for iron ore and hardly any for bauxite. The brokerage added that Odisha’s focus on raising bauxite production via a state-owned agency should improve mineral supply in the state.
“JSW Steel (BUY) and Vedanta (BUY) lack captive resources and could benefit the most from higher resource integration, although value accretion from any captive mines would depend on the competitive intensity in auctions,” said CLSA.