Odisha to go to court if concerns on mining ordinance not met

Opposes extension of lease validity of mines, wants higher profit sharing with local people

The central government had its way in enacting a new law for mining through the ordinance route but all states aren’t on board. Odisha has said if its concerns were not addressed, it would go to court.

Prafulla Kumar Mallik, the state’s minister of steel and mines, has said the Centre must not ignore international commitments, and memorandums of understanding with companies like Posco should be honoured. Mallik was in Delhi to attend the conference of state mines ministers on the ordinance.

Though Union minister Narendra Singh Tomar did not answer a specific query on Posco’s case, Anup Pujari, mining secretary, said all forms of letter of intents given to companies prior to the enactment of the ordinance would stand but added a memorandum of understanding was not a letter of intent. Hinting that Posco, too, would have to come through the bidding route, as in the ordinance’s rules.

In the case of second renewals and subsequent extensions of mining leases, Mallik maintained the Union government should provide in the law for auction of all mines. According to the ordinance, miners asking for renewals would now get 15 years as extension in the case of captive mines and five years for other mines. “Miners who have second and subsequent extension should not be given the opportunity to make super-natural profit,” Mallik told reporters here.

“The extension of lease validity effectively take away the revenue benefits which were expected to accrue to state governments in the next five years from auction of major minerals and negates the spirit of the Ordinance to bring about transparency in the settlement of major minerals. We urge the Union minister not to extend the largesse of further profit making to lessees who have already completed their right to lease by mining beyond even 50 years,” he added.

The minister pointed out there should be adequate earmarking of mines for end-user industries under the new system to promote value addition, manufacturing in India and employment

He said his state wanted to provide a higher amount for benefit sharing with local people through the various District Mineral Foundations (DMF). The ordinance has capped the benefit sharing with locals (payment to DMFs) at a third of the royalty paid by a mining company. Goa, however, is opposed to such a levy. A senior state official said companies operating in Goa are required to give 10 per cent of the sale value of minerals for local area development under a court directive. “We want that companies operating in our state be exempted from clause 8 of the Ordinance,” he said.

Mallik also opposed the government’s decision to extend the validity of every existing lease to 50 years. Such sections, he said, modifies the basic structure of mineral administration. “Bringing these amendments behind the back of the state governments render the consultation process with states to a farce,” he said.

The minister, in his speech at the conference, also questioned a mining company's being granted a first right to refusal for a lease in case it already holds the reconnaissance permit or prospecting licence. “This further restricts the number of leases which could be settled by auction and needs to be reconsidered,” he said.

Goa supported the ordinance on most counts but wanted exemption for companies in the state which have already got an extension. “Application of the ordinance on leases which have been granted extension will not stand legal scrutiny. So, we have asked the Centre to clarify in the explanation that those granted an extension will be governed by the earlier provisions,” said a senior state official, requesting anonymity.

Odisha had earlier demanded abolition of the Revision Authority under Union mines ministry citing huge pendency of mine related cases. Among other recommendations sent by Odisha for the draft MMDR (Amendment) Bill included providing power to the state government to levy cess on mining to support investment in curbing pollution due to excavation activities. The state government had also demanded that mineral bearing states be consulted before finalising the terms and conditions of the auction.