The Radia Tremor 4: The Ankua mine conundrum for Tata Steel

SC order on inquiry into bagging Ankua mine came after CBI said move could have involved payment of illegal gratification or favours expended to public servants

After the Central Bureau of Investigation (CBI) said the conversation recorded in the Niira Radia tapes suggested illegal gratification or favours to public servants on allotment of iron ore mines at Ankua in Jharkhand to Tata Steel, the Supreme Court said the issue called for an inquiry.

The conversation had allegedly suggested that the then Chief Minister of Jharkhand, Madhu Koda, had asked for Rs 150 crore for granting an iron ore licence (Koda was later jailed for a multi-crore money laundering scam and is out on bail). As per the tapes, Tata Steel refused to pay the money to Koda.  When the conversation came to light, the company and its then communications agency, Vaishnavi, had strongly denied grant of any licence to Tata Steel against payoffs.

But in a conversation with an editor of a TV channel, Radia was heard talking about how Koda was asking for Rs 150 crore bribe to allot a mine. The call was recorded by the income tax department on June 16, 2009. The Income tax department had kept Radia’s phone under surveillance for suspected tax evasion.

THE DARK SECRET RISES

• 2006: Madhu Koda was sworn in as Jharkhand chief minister
• 2007: Jharkhand govt recommends Ankua deposits for Essar, JSW Steel, Tata Steel
• 2008: Essar, JSW Steel bag PL for Ankua, Tata Steel left out Koda resigns from CM post
• 2009: Jharkhand governor steps in for Tata Steel PL

In another conversation with an editor of a South-based daily, Radia is heard saying she had a meeting in Ranchi with Koda who asked for a bribe to grant the Ankua  mine to Tata Steel. The former corporate lobbyist then says she went to the Governor after President’s rule was declared in the state and appealed to get the mine.

 

After the Central Bureau of Investigation (CBI) said the conversation recorded in the Niira Radia tapes suggested illegal gratification or favours to public servants on allotment of iron ore mines at Ankua in Jharkhand to Tata Steel, the Supreme Court said the issue called for an inquiry.

The conversation had allegedly suggested that the then Chief Minister of Jharkhand, Madhu Koda, had asked for Rs 150 crore for granting an iron ore licence (Koda was later jailed for a multi-crore money laundering scam and is out on bail). As per the tapes, Tata Steel refused to pay the money to Koda.  When the conversation came to light, the company and its then communications agency, Vaishnavi, had strongly denied grant of any licence to Tata Steel against payoffs.

But in a conversation with an editor of a TV channel, Radia was heard talking about how Koda was asking for Rs 150 crore bribe to allot a mine. The call was recorded by the income tax department on June 16, 2009. The Income tax department had kept Radia’s phone under surveillance for suspected tax evasion.

In another conversation with an editor of a South-based daily, Radia is heard saying she had a meeting in Ranchi with Koda who asked for a bribe to grant the Ankua  mine to Tata Steel. The former corporate lobbyist then says she went to the Governor after President’s rule was declared in the state and appealed to get the mine.

 

"The Ankua deposit is not a very big one, it has reserves of around 100 million tonnes and Tata Steel is yet to convert it to get the mining lease. It is still in the PL stage," a Tata Steel official had said in an earlier interaction.

Analysts say captive raw material resources are crucial for a company's competitiveness. Iron ore and coking coal are key input materials for a steel company, accounting for 75-80 per cent of the total raw material cost.  Tata Steel's iron ore units are located in Noamundi, Joda and Katamandi in Jharkhand and Odisha that feed the 9.7 million tonne steel plant at Jamshedpur.

In 2008, the company had said that it had iron ore reserves of around 300 million tonnes in India, which would last another 20 years. But that was in the context of Jamshedpur. However, with no mines allotted for the Kalinga Nagar project in Odisha, which was expected to commission the first phase next year, Tata Steel may have to service it from its iron existing mines.