India’s largest private sector steel producer JSW Steel might take legal action against the government for its recent decision to cancel allotment of a coal block to the company. The block, Gourangdih ABC located in Raniganj coalfield in West Bengal, was to feed JSW’s captive power plant linked to a mega 10,000 Million Tonne (MT) per annum steel plant in the state.
“We will take up this matter at the appropriate forum, either in the court or with the government itself. This will be after we receive a formal notification of de-allocation,” company’s Joint Managing Director Seshagiri Rao said. “We have taken effective steps in development of the mine and also in implementing the end-use plant,” he added.
JSW Steel, led by industrialist Sajjan Jindal, had announced plans to spend Rs 35,000 crore to set up the mega steel plant in 2007. In the first phase, the steel maker wants to spend Rs 16,000 crore to set up 3 MTPA of steel making capacity. The project involves setting up a 1,600 Megawatt (Mw) captive power plant which was to source coal from the block.
Rao said JSW Steel has been “committed” to the development of the project, including the block. The coal ministry had cancelled the block’s allotment last month as the company failed to meet critical milestones for its development, including green clearances and land acquisition. Gourangdih ABC was allocated jointly to JSW Steel and Himachal EMTA in 2009.
The block was one of the seven blocks allotments for which were axed by the government last month as part of an exercise to review the progress of 195 captive coal blocks. This came at the back of allegations by Opposition Bharatiya Janata Party (BJP) that the government favored certain companies while allocating blocks.
JSW Steel has a current steel-making capacity of 14.3 MT. This includes its showcase 10 MTPA Vijaynagar plant in Karnataka. The company's production has been severely since the Supreme Court has in August last year imposed an interim ban on mining in the state. The company is currently utilizing 85% of its total capacity as additional iron ore has become available from e-auctions.
JSW Steel’s share price at the Bombay Stock Exchange (BSE) today closed at Rs 773.0, up 3.6% as compared to previous close.