BHUBANESHWAR: Essar Steel has emerged as the frontrunner to bag the first iron ore mine being auctioned in Odisha. While both company and state government officials declined to comment on record, people in the know said the steelmaker made the winning bid, beating Jindal Steel & Power, JSW Steel, Bhushan Steel and Bhushan Power & Steel. Essar has committed to pay the state government 44.35% of the average per-tonne iron ore price derived by the Indian Bureau of Mines. Ensuring the essential raw material through a captive mine should come as a big relief to Essar Steel, a company grappling with huge debt which at the end of March 2015 stood at close to Rs 35,000 crore. It has been buying iron ore from state miner NMDC and private miners in Odisha. “The base had been fixed at 5% over the reserve price (the highest price quote in the preliminary round), so this is a very good offer. Bidding went on till 10 at night on Wednesday and we are very happy with this first iron ore auction,” said a government official who asked not to be named. A company spokesperson didn’t respond to an e-mail seeking comment until press time on Thursday. Ruias-controlled Essar has a 6 million tonne beneficiation plant at Dabuna, not too far from the Ghorhaburhani-Sagasahi block with 99.54 million tonnes of reserves in Sundargarh district. According to mining department officials, this block spread over 139.16 hectares has a relatively high share of fines, which makes it even more suitable for a pellet maker. The area includes 20.88 hectares of forest land and completing regulatory procedures, including getting forest clearance and a mining plan approved, could take Essar a few years. The company will in addition also have to pay other applicable taxes, such as royalty (15%) and mineral development tax (10%). This is the first mine to be auctioned in the mineral-abundant state of Odisha after amendments were made to the Mines and Mineral Development and Regulation Act. Tata Steel and state steelmaker RINL, which too qualified at the technical round, had failed to make the cut of top five bidders who competed in the financial round. The state is expected to give the winning bidder a letter of intent before the end of the month. Iron ore beneficiated at Dabuna is taken to the company’s 6 mt pellet plant at Jagatsinghpur, near Paradip, through a 253-km conveyor pipeline, one of the longest in the world. Essar has only 405 acres of the total 2,500 acres it wants for the project at Paradip and is way behind its earlier announced plans for this plant. The pellets were to be shipped to its parent steel plant at Hazira in Gujarat. Essar’s steel business took big hits, first when gas was de-allocated and then when a slurry pipeline drawing iron ore from NMDC’s mines was twice destroyed by left wing extremists. Essar, which is sitting on huge debt, had denied reports speculating the possibility of its debt being converted into equity, but confirmed in November of hiring advisers for a strategic sale of stake to help reduce debt.