For degrading the quality of its iron ore at the Narayanposhi iron and manganese ore block in the Koira mining circle in the Sundargarh district, the committee fined steel giant JSW. At a premium of 98%, JSW won the block in the February 2020 iron ore auction with 190 million tonnes.
Three mining leaseholders in the state of Odisha have been fined a total of 341 crore by the state government, including 298.54 crore to steel giant JSW, 37.1 crore to Patnaik Minerals, and 5.42 crore to Yazdani Steel and Power Ltd for allegedly lowering the grade of iron ore.
This occurred months after BJP MP Aparajita Sarangi charged that leaseholders of iron ore mines in Odisha were purposefully degrading the ore to avoid paying export duty as well as tax due to the federal government and the state in the previous three fiscal years.
Following the amendment of the Mines and Minerals Development Regulation Act, 2015, a three-member committee, including the director of mines and a representative of the Indian Bureau of Mines, visited three of the 19 iron ore and manganese mines in Odisha that were auctioned off in 2020 and found that they were guilty of downgrading the ore quality.
For degrading the quality of its iron ore at the Narayanposhi iron and manganese ore block in the Koira mining circle in the Sundargarh district, the committee fined steel giant JSW. With 190 million tonnes of iron ore and a premium of 98%, JSW won the block in the February 2020 auction.
A grade drop is seen. During the inspection, a working crusher was not visible. Yet, based on indirect information, it appears that the crusher is in use, according to the investigation committee.
Also penalised was Patnaik Minerals, which in February 2020 paid a premium of 92.7% to win the Mahulsukha iron and manganese block in the same circle. “It was noted that the grade dropped. The committee reported that the screening plant was operating in violation of the mining plan’s requirements and the consent to operate order.
Moreover, Yazdani Steel and Power Ltd (formerly Yazdani International), which manages the Kolmong Iron Ore and Manganese block in the same circle, was fined three times for the same violations.
The three leaseholders’ representatives declined to comment on the fine, claiming they have appealed to the mines ministry’s revisional authority. The company has already obtained a stay on the demand for the Rs.298 crore, according to a JSW official who declined to provide his name.
A lot of the iron ore leaseholders who won the lease through an auction in 2020, according to allegations made by BJP MP Sarangi last year, are allegedly purposefully degrading the ore quality to avoid paying export taxes.
She said that although while Odisha’s proportion of low-grade iron ore exports from the nation (with Fe content less than 58%) was just about 23.4% in 2018–2019, it stayed above 70% for the next three fiscal years.
According to Sarangi, the exchequer would suffer a loss of 62.61 crore for every 1 lakh tonnes of iron ore lump mining if the ore grade was reduced from 65% and above Fe to below 58% Fe.
The loss would be in the millions of crores, she claimed, given that Odisha now exports more low-grade iron ore than any other state, up from 8% to over 70%.
According to a former employee of the mining department, the percentage of low-grade ore in the state mines used to be far lower during the 2019–20 pre–auction period.
Rajesh G, the director of mining, declined to comment on the accusations or the investigation committee’s conclusions.
But according to Brahma Mishra, president of the influential industry group Utkal Chamber of Trade and Industry, one must determine whether the leaseholders are participating in downgrading.
Prasanta Patnaik