The State Government has lost revenue of over Rs 2500 crore due to shortfall in monthly dispatch of iron ore by auctioned mines vis a vis minimum dispatch requirement as per Rule 12-A of the Mineral Concession Rules for the period from July to November. The Government has auctioned 21 iron ore mines with about 1,900 million tonne (MT) reserves, with total EC capacity of about 89 MTPA for continued supply of ore and sustainable revenue generation for the State.
All the blocks were won at exorbitant bid premium values making them unviable from the very beginning. Presently, some lessees are resorting to theft, policy changes, corruption, lower production etc until law changs to ensure that there outflow on premium, royalty, DMF and NMET is considerably reduced.
These actions have led to acute shortfall in mineral production due to deliberate low production by the lessees.
The prices of iron ore have skyrocketed by 207% from Rs 2,047 per tonne in July to Rs 6,350/tonne in December for 62-65% Fe grade fines as these big corporate led miners continue to play with law and the Government machinery.
As per provision , the new lessee is required to maintain such level of production so as to ensure minimum dispatch of 80% of the average of the annual production of two immediately preceding years on pro-rata basis, failing which appropriate actions in accordance with respective MDPAs shall be initiated as prescribed under rule 12A(1) of the Mineral Concession Amendment Rules 2020. The law has deliberately used the word ‘pro-rata’ to ensure that the monthly dispatch levels are maintained to pre-existing levels and artificial scarcity of iron ore is not created in the market.
The law clearly had the intent to maintain monthly dispatches for sustainable supply of ore with consistent revenue generation for the State.
The current lessees are deliberately delaying production with the hope that the impending MMDR and rule amendments which they are pushing with the Union Mines Ministry will lessen their burden of payment to the State Government.
Due to much lesser dispatch of iron ore, the State has already lost a revenue of Rs 2, 500 crore unless it is recovered as penalty from these auctioned mines.
The major mines like Jajang iron ore mine, Nuagaon iron ore mine, Narayanposhi iron and manganese mine and Ganua iron ore mine of M/s JSW Steel Limited with total EC capacity of 29.3 MTPA have dispatched only about 4 MT(54%) against minimum dispatch requirement of 7.4 MT during July-November. Similarly, Balda iron ore mine of M/s Serajuddin has dispatched only 0.30 MT (7%) against dispatch requirement of 3.8 MT and Thakurani iron ore mine of M/s Arcelor Mittal has dispatched only 0.23 MT (23%) against minimum dispatch requirement of 1.8 MT during the period from July to November.
Submitting a petition to the Principal Secretary, Steel and Mines of Odisha, MASS secretary Subrat Tripathy urged the Government to recover the Rs 2,500 crore in the form of penalty from the auctioned mines which have produced less than the minimum production requirement under their respective MDPAs.
