JSPL, Hindalco drop on buzz of coal mines facing de-allocation

Jindal Steel & Power and Hindalco Industries dropped 3.49% to 3.91% at 12:13 IST on BSE on reports the Supreme Court may de-allocate the mines allotted several years ago to both these companies.

Jindal Steel & Power (JSPL) lost 3.49% to Rs 229.40 on volume of 4.86 lakh shares.

Hindalco Industries declined 3.91% to Rs 168.30 on volume of 3.77 lakh shares.

Meanwhile, the BSE Sensex was down 120.41 points, or 0.44%, to 27,019.53

As per reports, the Supreme Court may de-allocate the Mahan Coal block allocated to Hindalco Industries eight years ago to feed its aluminium plant in Madhya Pradesh.

Mahan Coal is a joint venture between Hindalco Industries and Essar Power, which have already invested Rs 20000 crore for setting up end-use plants.

Reports also indicated that the Supreme Court may also de-allocate Jindal Steel and Power (JSPL)'s Utkal B1 block. JSPL needs access to coal from Utkal B1 mine for its steel and power project at Angul in Odisha.

The Supreme Court in its ruling on 25 August 2014 termed 218 coal mine allocations between 1993 and 2009 as arbitrary and illegal, putting a question mark on the fate of several mines, including those of Hindalco and JSPL. Following that, the government asked the Supreme Court to spare 40 producing and six soon-to-be-operational blocks from cancellation, and instead impose penalties on the operators for any wrongdoing while procuring them.

The government is in the process of filing an affidavit giving details of 46 mines, requesting the Supreme Court not to cancel their licences. Reportedly, there was no mention of Mahan Coal mine and Utkal B1 mine in the affidavit stoking fears of de-allocation. Yesterday, 3 September 2014 was the last date for filing an affidavit and the next hearing of Supreme Court is on 9 September 2014.

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