Orissa urges IBM to arrest under-reporting of iron ore prices

The gross under-reporting of prices of different grades of iron ore by some unscrupulous miners in Orissa, resulting in revenue loss to the state exchequer has snowballed into a major issue.

The huge disparity in prices of iron ore lumps and fines in the state compared to all-India average and that of neighbouring Chhattisgarh has prompted the steel & mines department to seek the intervention of the Controller General of Mines, Indian Bureau of Mines (IBM).

The pit's mouth value (PMV) of 55 per cent Fe fines in Orissa (as on April 2011) stands at only Rs 654 per tonne compared to the all-India average price of Rs 1,154 and still higher price of Rs 1,768 per tonne in Chhattisgarh. There is also a big gulf in price of 58 per cent to below 60 per cent Fe fines. While the all-India average price of this grade of fines is Rs 2,168 per tonne and that in Chhattisgarh is even higher at Rs 2,657 per tonne, the ex-mine price in Orissa stands humbly low at Rs 890 per tonne.

Concerned over such steep variations in prices, the state steel & mines secretary Manoj Ahuja has written to the Controller General of Mines-IBM, requesting him to prevent such large scale under-reporting in prices.

Ahuja has also suggested that till correct reporting is put in place, either the all-India average price or price of National Mineral Development Corporation (NMDC), whichever is higher for the particular grade may be adopted for Orissa for assessment of royalty on ad-valorem basis.

Besides, the steel & mines department has pointed out that IBM needs to wake up to the issue and arrest such under-reporting of ore prices. The unscrupulous mine owners who are under-reporting PMV may be dealt severely under Rule 58 of the Mineral Conservation and Development Rules-1988 and action taken may be shared with the state government at the earliest, the department has suggested to the IBM.

It has also urged IBM to verify such under-reporting with reference to FOB (free on board) price from customs, sale invoices, copy of buyer/importer agreement and sale price figures obtained from public sector undertakings like NMDC and Orissa Mining Corporation (OMC).

On a recent investigation, the state steel & mines department had found 17 lessees in Orissa selling iron ore lumps and fines at prices lower than the all-India average as a result of which the state government is losing out on royalty.

On review of the IBM sale prices of iron ore for March 2011, it was observed that while the rate of iron ore lumps having Fe content of 58-60 per cent, 62-65 per cent and above 65 per cent are higher than the all-India average, the rate for lumps with 58 per cent Fe content is nearly one-fourth of the all-India average.