Non-payment of fines to shut off 20 mn tonne iron ore capacity in Odisha

The deadline for paying compensation for overproduction of iron and manganese ore according to SC judgment was December 31

Seven working iron ore mines have shut down in Odisha as nine owners failed to pay the penalties ordered by the Supreme Court. The closure of operational leases is set to knock of 20 million tonnes (mt) of annual iron ore capacity in the state.

Odisha is the biggest producer of iron ore in the country. The state produced in excess of 100 mt in last fiscal and has approved environment clearance (EC) to churn out 180 mt in 2017-18.

The deadline for paying compensation for overproduction of iron and manganese ore according to the August 2 Supreme Court judgment was December 31. Serajuddin & Company, Mesco Steel and state-run Industrial Development Corporation of Odisha Ltd (IDCOL) are among the key working mines that failed to meet the apex court-mandated deadline for penalty payments. The three companies operated their leases in Keonjhar's Joda circle.

While Serajuddin was burdened with Rs 748 crore penalty, Mesco Steel was slapped with a demand notice to pay Rs 9,247.5 million as compensation. Among the non-operational mines, Sarda Mines was saddled with the biggest penalty of Rs 1,938 million.

"The closure of working mines will cut iron ore capacity in Odisha by 20 million tonnes each year. The production cut will be reflected in the last quarter of this fiscal. With the shutdown of these mines, Odisha has now only 40 iron and manganese leases in operations", said a mining industry source.

After the Supreme Court verdict dated August 2 this year, the Odisha government had slapped demand notices on 131 mines to pay compensation amounting to Rs 175.76 billion for EC violations. The compensation was calculated by the central empowered committee (CEC), a Supreme Court-appointed panel that probed into large-scale mining irregularities in Odisha. The miners were bound to pay the compensation for overproduction of iron ore and manganese ore latest by December 31 to save their leases.

Prafulla Mallick, Odisha's steel & mines minister said, "The state government has shut down seven working mines as they did not pay the penalties. We have recovered Rs 8,223 million from the lessees."

Most of the key miners with huge penalty burdens have paid their share of compensation. Tata Steel, Essel Mining, Rungta, state-run Odisha Mining Corporation (OMC), Jindal Steel & Power Ltd (JSPL), Indrani Patnaik, Kaypee Enterprises, Aryan Mining & Trading Corporation and Tarini Minerals and K N Ram have made payments. All these companies were slapped with demand notices where the payable amount exceeded Rs 1 billion.

OMC faced the biggest penalty burden at Rs 2,177.97 million. There were other leaseholders saddled with significant penalties- Sarda Mines (Rs 1,983.86 million), Essel Mining (Rs 1,102 million), Mesco Steel (Rs 9.24 billion), Orissa Minerals Development Corporation (Rs 6.42 billion) and Tata Steel (Rs 6.14 billion).

In its report, CEC said miners in Odisha extracted 215.5 million tonnes of iron and manganese ore beyond approved limits between 2000-01 and 2010-11.