Temporary ban on Odisha mines shocks mining & steel companies

The Supreme Court's order on Friday for temporary closure of iron ore mines in Odisha working under deemed licences is harsh news for many mining and steel companies. It could mean up to 30 million tonnes of annual output off the market.

Industry sources said the apex court ordered suspension in operations of those mines awaiting a second and subsequent renewal. The Odisha government is believed to have been given six months to dispose pending applications of such mines, according priority to captive mining.

“In Odisha, 26 mines that are awaiting second and subsequent renewal are operating under deemed extension. The apex court order could mean suspension of their operations, whose combined production capacity is of the order of 30 million tonnes. The situation would lead to skyrocketing of iron ore and steel prices in the country. Closure of mining operations would also be a huge revenue loss to the state exchequer,” said a top official of a large standalone mining company.

The order could affect operations of captive mines of leading steel makers Steel Authority of India Ltd (SAIL) and Tata Steel, and also standalone mining companies such as Essel Mining & Industries.

The order would also deprive steel mills within and outside Odisha of high-grade ore and is likely to have a cascading impact on ore and steel prices, said mining and steel companies.

Deepak Mohanty, the state government's mines director, said: “We have heard that the Supreme Court has given its interim order on a case of illegal mining in the state. But we are yet to get a copy of the order.”

“As the SC order says, the state government now has to take steps to expedite the lease renewal applications of mines facing suspension. It remains to be seen how promptly the state government responds,” said R K Sharma, secretary general, Federation of Indian Mineral Industries.

Said a senior executive of a leading steel company, “The suspension would have a disastrous effect on the steel industry and also on employment. Miners should not suffer if the central or the state government do not dispose renewal applications on time.”

Among the 26 iron ore and manganese mines awaiting second and subsequent renewals are those of Tata Steel (Khandabandh, Katamati, Joda East, Joda West, Bamebari, Manmore, Guruda & Tiringpahar), SAIL (Bolani), Odisha Minerals Development Company (Belkundi and Bagiaburu M-block), Kalinga Mining Corporation (Jurudi), Essel Mining & Industries (Jilling-Langalota), Patnaik Minerals (Jaribahal) and KJS Ahluwalia (Naugaon).