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| Expansion of Toshali Cement hinges on mining lease renewal |
| Bishnu Dash / Kolkata/ Bhubanerswar Feb 19, 2009, 00:03 IST |
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The fate of the proposed Rs 140 crore capacity expansion of the Toshali Cement plant located at Ampavali in Koraput district remains uncertain, as the state owned Industrial Development Corporation of Orissa Ltd. (Idcol) is yet to take a decision on the company’s request for renewal of the mining lease (ML) for limestone mines.
Though the company submitted a proposal to the Industrial Promotion and Investment Corporation (Ipicol) seeking to expand its cement production capacity from the existing 600 tonnes per day (TPD) to 2100 TPD, it is yet to take any decision in this regard. Sources said, Ipicol has told Idcol to communicate its decision on Toshali Cement’s request for renewal of the ML and extension of the lease area to cover the entire limestone deposits at the location instead of 50 percent of the area now.
“We have told Idcol to communicate Ipicol about its decision on the request of Toshali Cement to extend the term of the agreement by another 10 years. The expansion proposal can be put before the State Level Single Window Clearance Authority (SLSWCA) for consideration after Idcol agrees to the request ”, Ashok Meena, managing director, Ipicol told Business Standard.
Hyderabad based Toshali Cement Private Ltd.(TCPL) purchased the assets of the Snehadhara Industries located at Ampabali in 2004-05 after the unit became sick. The unit was referred to Board for Industrial and Financial Reconstruction (BIFR) and the matter was referred to Debt Recovery Tribunal (DRT).
TCPL entered into a five year agreement with the state owned Idcol for raising limestone from Ampavali mines in September 2004. Accordingly, TCPL was given the mining lease for 50 percent of the total mineable area of 500 hectares.
As per the agreement, the company paid royalty at the rate of 15 percent during the first three years, 20 percent in the fourth year and 25 percent in the fifth year to Idcol. Since the agreement will expire in September 2009 and the company intended to expand its capacity, it applied Idcol to allow mining in the total area along with renewal of the ML granted to the company for another 10 years.
Though Idcol has in principle agreed to renew the ML for the Ampavali limestone mines, the terms are being finalised. An internal committee constituted by Idcol is now examining the issue and is likely to come out with a report soon. The committee, sources said, may recommend for fixation of minimum raising capacity for TCPL which may be fixed at 25,000 tonne per month. It will be asked to pay full royalty to Idcol even if the raising is lower than this target.
The committee may also recommend to equalise the royalty paid by Toshali Cement to the state government with that of Idcol. It may also ask the company to pay the royalty amount as agency fees. Besides, continuation of the security deposit of Rs 20 lakh in cash and Rs 30 lakhs in bank guarantee may also be recommended by the committee.
The expansion proposal assumes importance as Orissa, despite the current wave of industrialization, was not able to attract any cement plant during the 10th plan period. That apart, the industries are not willing to set up their units in backward and naxal affected districts of the state.
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