House panel makes pitch to allot captive mines to KIOCL

PSU has been struggling to source iron ore for its pellet plant after SC order forced it to wind up mining in Western Ghats

The Standing Committee on Coal and Steel set up by Parliament has made a strong recommendation to the government to allot captive mines to the steel ministry undertaking KIOCL Limited. Presently, the company, which converts iron ore into pellets and exports, is suffering for want of mining assets.

The Parliamentary Committee, chaired by Rakesh Singh, has also noted that some major projects envisaged for implementation during the 12th Five Year Plan period (2012-17) are stuck for various reasons such as the forward and backward integration project at the blast furnace unit like ‘ductile iron spun pipe’ (DISP) and coke oven among others with a plan outlay of Rs 791 crore were dropped.

The committee believe that the company should strive hard and take up such projects that will increase the profitability of the company.

KIOCL suspended mining at its captive mines in Chikkamagalur district of Karnataka, an eco-sensitive zone, following the Supreme Court order from January 1, 2006. Since then, the company has been sourcing raw material from NMDC’s mines in Chhattisgarh incurring huge logistics costs which in turn cut into the profits of the company.

The committee has observed that KIOCL, besides incurring heavy logistics costs, is also suffering due to levy of Distance Based Charge (DBC) imposed by the Indian Railways. The committee notes that in case of development of iron ore deposits in Chikkanayakanahalli in Tumakuru and Ramanadurga in Ballari districts, the mining lease application is pending with the government of Karnataka.

The committee has expressed unhappiness that although in-principle approval for grant of mining lease (Block No. 2) over an area of 116.55 hectares in Hombalaghatta and Hosahalli villages of Chikkanayakanahalli taluk was obtained way back in 2008 and the company had also obtained a mine plan approval and environment clearance for the project, but the forest clearance is pending with the Karnataka State Forest Department due to overlapping of area with two other allottees. The issue has been kept on hold for almost three years due to imposition of a ban on iron ore mining by the Supreme Court in the Tumakuru district.

The committee are informed that the matter is being pursued with the state government by the KIOCL as well as the ministry of steel. The committee has acknowledged that such major delays are bound to affect the performance of any company as all mining operations have been stalled for the last 6-7 years. The committee, therefore, recommended that the ministry of steel should make concerted efforts so that all the clearances are obtained and all bottlenecks are removed urgently.

For the 12th Plan period, a plan outlay of Rs 3,080 crore was earmarked for the KIOCL. But, now the plan outlay has been revised to Rs 288.03 crore and the actual expenditure till December 2014 was Rs 28.97 crore. Its expansion and diversification plans including setting up of an integrated steel plant on a joint venture basis with a plan outlay of Rs 483 crore was also dropped as during the diligence process, the JV partner identified through the tender was found unsuitable.

The committee noted that all these projects have not materialised resulting in downward revision in the 12th Plan outlays. It has also noted that the KIOCL should strive hard and take up such projects that will increase the profitability of the company.