Why Rajasthan Cancelled the Auction of 13 Limestone Mines to an Adani Subsidiary

Translated from the Hindi original – which first appeared on The Wire Hindi last year – by Naushin Rehman.

New Delhi: Citing concerns regarding public interest and potential revenue loss, the Bharatiya Janata Party-led government in Rajasthan cancelled the allocation of 13 limestone blocks to the Adani Group last year. Between August 22 and August 29, 2024, Ashu Chaudhary, the joint secretary of the Mines and Petroleum Department of Rajasthan, issued 13 distinct orders that revoked the e-auction through which these mines were allotted to the Adani Group's Ambuja Cement earlier in 2024. All of these mines are situated in the Nagaur district of Rajasthan.

"In consideration of the broader public interest and state revenue, the bid submitted by M/s Ambuja Cement Limited is hereby rejected in accordance with clause number 14.11 of the tender document," states a copy of one of the orders.

The wording of all the orders is identical, with only the name of the block and the auction-related details being changed. The Wire Hindi possesses copies of all these orders.

Data from the Mines and Geology Department of Rajasthan indicates that a total of 21 limestone blocks were auctioned during the financial year 2023-24, of which Ambuja Cement secured 20 blocks. An investigation by The Wire Hindi reveals that Ambuja Cement was the sole bidder in the auction for at least 15 of these 20 mines. The Rajasthan government has subsequently canceled the auction for 13 of these blocks.

Interestingly, the announcement regarding the cancellation of the auction coincided with The Wire Hindi conducting a thorough investigation into this matter. We had also requested information from the state government through an RTI application (Application Number – 137414692595643). On August 21, 2024, The Wire Hindi submitted an RTI request that included the following inquiries:

(1) How many limestone mines were auctioned by the state government during the financial year 2023-24?

(2) Which companies took part in those auctions, and who got the bid?

(3) What amount was added to the state government's revenue as a result of those auctions?

At the time of publishing the original report, The Wire Hindi had not received a response to the RTI request, yet the order to cancel the auction has been issued.

A setback

The government's recent decision dealt a severe blow to the Adani Group, led by Gautam Adani, as it strives to expand its cement operations. Over the past few years, the group has swiftly acquired control over limestone mines essential for cement production.

According to the annual report of the company, during the financial year 2023-24, Ambuja Cements, a subsidiary of the Adani Group, successfully acquired 24 new limestone mines through auction.

The Adani Group's website indicates that Ambuja has engaged in the auction of limestone mines located in Rajasthan, Karnataka, Odisha, and Maharashtra. Gautam Adani has thus become the proprietor of the second-largest cement manufacturing company in the nation.

Why was the auction cancelled?

The auction of 13 blocks has been cancelled, and their names are PSB03, PSB04, PSB05, PSB08, PSB09, PSB10, PSB13, PSB14, PSB15, PSB16, PSB17, PSB18, and HPB21.

The circumstances surrounding the cancellation of the auction for all these blocks are identical.

On September 11, 2023, a notification was issued regarding the auction of 15 blocks situated near the villages of Harima, Sarsani, Pithasia, and Somana in the Nagaur district. The auction process was finalised between February 21, 2024, and March 14, 2024.

In the initial attempt to auction all these blocks, only one bidder was deemed technically eligible – Ambuja Cements.

In the next attempt, only Adani's company Ambuja Cements placed a bid and secured the mines in its name. Due to a decline in revenue and public interest, the government has now cancelled these mines.

The cancellation order for the mine states that upon reviewing the auction process, the department discovered that the bids received were significantly lower than those obtained in other blocks auctioned in the same area.

For instance, let us examine the order letter concerning PSB13, which mentions that the auction notification was issued on 19.06.2023, and in the following auction, only one bidder was found to be technically qualified.

Subsequently, the government 'cancelled the first auction attempt under Rule 9 (10) of the Minerals (Auction) Rules, 2015 and initiated a second attempt to re-auction the specified block'.

The notification for the new e-auction (for Block PSB13) was released on 11.09.2023, and in the second attempt, the reserve price of the block was set at 25.10%. When the final auction took place on 04.03.2024, 'the highest bid of 25.15 percent was submitted by the bidder M/s Ambuja Cement Limited'. Therefore, the highest bidder company M/s Ambuja Cement Limited was recognized as the Preferred Bidder (for Block PSB13).

However, upon reviewing the entire procedure following the allocation of the mine, the department discovered that there was merely one qualified bidder (Ambuja Cements), resulting in an auction bid of 25.15%, ‘which was significantly lower than the bids received for other blocks auctioned in the same region’.

Consequently, the government cancelled the auction of these 13 mines, considering the loss of public interest and revenue. A similar issue was identified during the investigation of other mines, as evidenced by the order letter provided below:

Order letter issued regarding cancellation of auction of Block PSB03 (page one)

Order letter issued regarding cancellation of auction of Block PSB03 (page no.-2)

The highest bid (the price at which the mine was agreed to be allocated) for all the mines whose auctions have been cancelled, with the exception of one, ranged between 25.15% and 25.20%. Only one block (HPB21) received a highest bid of 27.10%.

This order letter indicates that the auction process for the blocks whose auctions have been cancelled can commence shortly, 'investigate the reasons for the lack of competition and low bids in the auction of the specified block (to which the order has been issued), implement corrective actions, and ensure that the auction is promptly conducted again.'

Government's response

All orders bear the digital signature of Ashu Chaudhary, the Joint Administrative Secretary of the Mines and Petroleum Department (Rajasthan). However, when contacted by The Wire Hindi, he refused to provide any comments. When inquired about the extent of revenue loss the state government was experiencing, he stated, "I am not authorised to disclose or discuss any information. You may reach out to the DMG (Department of Mines and Geology) office."

Despite attempts to contact the DMG office, there was no response.

Questions were also sent via email to the Adani Group regarding this matter, but as of the publication of the original report, there has been no response from them.

The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.