Coal ministry slaps showcause notice on MCL, JSW, JSL and Shyam DRI

The Ministry of Coal (MoC) has slapped a showcause notice on Mahanadi Coalfields Limited (MCL), JSW Steel Ltd, JSL Ltd and Shyam DRI Power Ltd for the inordinate delay in development of the Utkal-A coal block under the command area of MCL.

These companies had formed a joint venture (JV) company MJMJ Coal Ltd for developing the coal block

The MoC in its notice dated October 6, has asked the JV company to file its response to the showcause notice within 30 days failing which the ministry would assume that the company has no explanation to offer and appropriate action would be taken to de-allocate the said block.

"We have received the showcause notice and a response to it would be filed soon by the JV company. The development of the coal block has been held up mainly due to the pending forest clearance”, a top official of the JV company told Business Standard.It may be noted that the MoC had allocated the said coal block to the JV company on November 29, 2005.

It was stipulated by the ministry that coal production from the Utkal-A coal block was to begin within 36 months (42 months in case of forest land) in case of open cast mine and 48 months (54 months if the block falls under forest land) in case of underground mine.

MJMJ Ltd was directed by the ministry in its letter dated December 23, 2009 to submit a bank guarantee of Rs 22.25 crore which is yet to be submitted by the company.

In order to expedite the development of the said coal block, the MoC held several review meetings with the representatives of MCL, JSW Steel, JSL and Shyam DRI.

In the review meeting held on June 22-23, 2009, the JV company had assured to commence production from the said coal block by January 2010.

However, in the last review meeting held on July 20-21 this year, the ministry noticed that no serious efforts have been made to develop the coal block even though repeated assurance were given for the same.

The JV company was yet to achieve some critical milestones for the coal mining project like forest clearance, land acquisition and grant of mining lease.

The ministry has noted that the allocatee company has repeatedly failed to keep its promises made on earlier occasions and has inferred that it is non-serious about the development of the coal block.

The JV company slipped by two years and 11 months in the submission of the Mining Plan and by two years in filing application for EMP (Environment Management Plan) clearance by two years.