Odisha submits new iron ore sales policy to HC

Local steel mills bound to lift ore allotted to them at IBM fixed rate

The steel and mines department of the Odisha government, which recently finalised its policy on mandatory iron ore sales to local industries, has submitted the document to the High Court.

“The state government issued a gazette notification outlining iron ore sales policy last week. It has been forwarded to the High Court as the last date for complying with the court order on formulation of such a policy is July 3,” said a government official with direct knowledge of the process.

The state government, through a resolution dated December 5, 2012, had asked the local miners to reserve half of their monthly iron ore output for meeting the raw material need of end use industries in the state operating without any ore linkage. The order excluded captive miners.

Many mine owners including top mining body Federation of Indian Mineral Industries (FIMI) contested the notification of the state government, demanding its withdrawal and moved the Odisha High Court in this regard.

The High Court, in its order on April 2 this year, had upheld the policy resolution of the state government, but asked the state to come out with a mechanism for its implementation within three months.

If the government fails to frame a proper mechanism within the stipulated time, then the notification would stand null and void, the court said.

The miners had complained that since steel making capacity of the state is barely below 10 million tonne (mt) per year, the raw material requirement works out to around 20 mt, in contrast with annual 78 mt iron ore output of the state.

Hence, the miners argued, reserving half of the output for local industries- roughly 40 mt - would result in stockpiling of huge amount of unsold ore as steelmakers fail to lift the raw material allotted for them every month.

Though the state government later partially relaxed the executive order by allowing miners to carry forward their monthly sales quota to next month, the miners were not satisfied.

In the new policy, it has been prescribed that if a steel making unit does not lift material allotted to it, then the said unit will be banned from taking part in the raw material linkage plan and its bank guarantee, collectible at 10 per cent of total sales value of ore, would be forfeited.

The pricing of the ore will be on the basis of rates determined by Indian Bureau of Mines (IBM) untill both the miners and steel makers reach at a reasonable pricing, according to the new policy.

However, many miners are apprehensive of the pricing policy and have announced their intention via mining lobby body FIMI to move the Supreme Court challenging the HC decision.