Sarada Mines in dock for Rule-37 violation

Probe finds the company selling entire produce to JSPL without agreement

Sarada Mines is in the dock for glaring violation of Rule 37 of Mineral Concession Rules (MCR)-1960. The lessee which holds lease of the Thakurani iron ore mines spread over 947.04 hectares in Keonjhar district has been found to sell its entire run of mine (ROM) produce to Jindal Steel & Power Ltd (JSPL) without any agreement.

According to an enquiry report of a five-member committee of steel & mines department headed by P C Patra, deputy director of mines (Bhubaneswar), the major benefit of the mine is flowing to JSPL. The present arrangement of selling ROM to JSPL by Sarada Mines amounts to transferring the interest in the mining lease to the steel company as per provisions of Rule 37 of MCR-1960, the report adds.

The arrangement also contributes to lower value added tax (VAT) collection by the Odisha government on account of low pricing of ROM in comparison to the value derived by JSPL from the product vis-a-vis the market price.

As disclosed in the tax audit report, ROM was sold by Sarada Mines to JSPL at the average rate of Rs 400 per tonne during 2008-09. The ROM is converted by JSPL into products including calibrated ore having much higher market value by spending relatively insignificant amount on processing.

The low pricing is evident when compared to market value of the products sold by other lessees. For instance, Mid East Integrated Steel Ltd paid at the rate of Rs 3350 per tonne and Rs 4000 per tonne for calibrated lump ore procured from M B Ispat Corporation and Shiv Shakti Steel Pvt Ltd respectively.

Besides selling the entire ROM to JSPL, Sarada Mines has also allowed the steel maker to install two crusher units having capacity of 1000 tonnes per hectare (tph) and 3000 tph within the leasehold area. As stated by the lessee, permission has been accorded for installation and operation of 1000 tph unit but no approval has been obtained for the 3000 tph crusher unit.

The enquiry report points out that there is lack of clarity regarding permission for installation of the two crusher units inside the leasehold area by the competent authority.

Stating that there is prime facie violation of Rule 37 of MCR-1960, the committee has recommended further visits by the officials to the mines of the lessee.