Odisha allows operation of seven iron ore mines

Decision to benefit Tata Steel, SAIL and OMC

The state government has taken a decision to allow operation at seven iron ore mines out of 26 mines shut down by a Supreme Court last month, expecting heavy losses to revenue generated as mineral royalty.

The decision to allow operation through an express order will benefit four iron ore mines of Tata Steel- Joda East, Joda West, Katamati, Bamebari, two mines of Steel Authority of India Ltd (SAIL)- Bolani and Barsuan-Kalta and one iron ore mines of Odisha Mining Corporation (OMC) at Kurmitar.

“The order of full-fledged operation was issued on Saturday. However, the mine owners will have to submit necessary clearances within three months for their lease renewal”, said Deepak Mohanty, Director in the state Mines department.

The Supreme Court on May 16 had asked to halt mining operation at 26 mines of the state, citing that automatic renewal of mines lease after 20 years of first renewal was illegal. It had also said the Odisha government must take steps to expedite renewal process of all the mines, especially the captive mines of SAIL and Tata Steel, within six months from the order.

Though a high level committee of the state government has sent its recommendation for renewal of around 15 mines so far, the new lease deed has not been executed as of now. The state government said allowing operation at the seven mines without a valid lease deed does not violate SC order.

“This order has been issued in pursuance of the SC order. There is no violation as the court had said that the state government can do so using its power to issue express order mentioned in the MMDR Act,” said Mohanty.

The order is likely to benefit operation of SAIL and Tata Steel who primarily depend upon these mines for their steel making units at Rourkela, Durgapur and Jamshedpur respectively and also boost royalty revenue of the state government which is on a slide. Though Mohanty denied that the decision was taken keeping revenue generation of the state in mind, sources in the government said, it was one of the key criteria for issue of the express order.

“The decision will help both the state and the industries in particular as these seven mines have a combined output capacity of nearly 15-20 million tonne, out of total projected loss of 35 million tonne following the implementation of the SC order”, said a source in the government.

The state received nearly Rs 4500 crore as mining royalty in 2013-14, collected from excavation of iron ore, bauxite and coal. Official estimate says, revenue from iron ore is nearly 40 per cent of total collection. However, this year revenue from iron ore is likely to drop by nearly half because of the closure of the mines.