Goa government will auction the low grade ore piled up in its properties over last several decades causing environmental hazards, a senior official said on Friday.The new Goa Minerals (Prevention of Illegal Mining Transportation and Storage) Rules, 2012 will amend the laws to empower state government to sell the iron ore dumps, which are usually of low grade, lying in the government-owned lands.

Principal secretary (Mines) R K Verma confirmed that the policy would be framed by mid-July but refused to divulge the details.He said the draft policy would be put up for public scrutiny before it takes final shape.The new rules, which will be ready within three weeks, will repeal and replace the 2004 rules, sources said.The heaps of ore are sometimes washed away during rains thereby polluting the nearby water bodies, a senior official said.

Goa has 750 million metric tonnes of ore in the form of rejects scattered across the state.The ore, which had no buyers, has suddenly got the value after demand from China increased since 2005.These rejects are usually used to blend with the high grade ore.

The state government has imposed a ban on handling these dumps since September 2011, in a bid to control the illegally extracted ore, which was funnelled under the guise of moving the dumps.State Mines and Geology department has already begun an exercise to identify the quantum of dumps, which are initially estimated to have been storing 750 MT of ore.

Chief minister Manohar Parrikar has insisted that even if someone stakes claim on the dumps in the government property, he should be fined exorbitantly before allowing him to lift the ore, sources said. The revised policy will also allow the mine owners to handle the dumps existing in their mining leases, but at a much higher price."The exact price has not been fixed but it will be much high," a senior official said.

Meanwhile, the environmentalists in the state, who have launched a tireless battle against the illegal mining activity, suspect a foul play in state government's inclination to allow the dumps to be handled by the mining firms."The illegalities will sprout through these dumps.

Actually, these dumps are major source of illegal mining," Ramesh Gawas, an environmentalist, told PTI.He said the state government was not serious in curbing the illegal mining in the state.

However, the state government officials claim that the policy is being meticulously drafted to ensure that there is proper rehabilitation of the people affected with the mining and also there is sustainable mining.