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Sarada Mines closure to hit JSPL's steel, pellet operations

The steel maker was also buying the balance lumpy ore from the stand alone miner to feed its three mtpa steel unitat Raigad (Chhatisgarh)


The closure notice served on Sarada Mines is set to have a debilitating effect on the steel and pellet plant operations of Jindal Steel &Power Ltd (JSPL).

The office of the deputy director of mines- DDM (Joda) had issued a closure notice on the miner since its environment clearance (EC)expired since April 1.

Beinga major beneficiary of Sarada Mines, JSPL was procuring the entireproduce of iron ore fines for its five million tonne per annum (mtpa)pellet plant at Barbil. The steel maker was also buying the balance lumpy ore from the stand alone miner to feed its three mtpa steel unitat Raigad (Chhatisgarh).

“Presently,we are running the pellet unit on stockpile of iron ore fines sourcedfrom Sarada Mines. But we will run out of the raw material stock intwo to three days. JSPL is procuring the entire production of ironore fines from the miner for its pellet operations. Also, we are buying iron ore lumps from the same mines for our steel plant atRaigad. The closure is bound to hit our operations”, said a senior JSPL executive.

But the company official sounded optimistic on resumption of minesoperations soon.

“Theissue related to EC for the mines will be sorted out soon. The expert appraisal committee (EAC) of Union ministry of environment &forests (MoEF) had recommended renewal of EC and the ministry has also granted the same. However, the matter is pending at the state government level that is yet to issue a notification to this effect”,he said.

SardaMines Ltd, the lessee holding the Thakurani mines at Barbil is indock for glaring violation of Rule-37 of Mineral ConcessionRules-1960. The mines owner was selling its entire run of mine (ROM)produce to Jindal Steel & Power Ltd (JSPL) without any written agreement. Also, the iron sale by the lessee was at unacceptably low rates compared to market prices. The case was referred to the SupremeCourt appointed central empowered committee (CEC) by the apex courtin its order dated September 16, 2013.

At hree-member team of the CEC led by its chairman P V Jayakrishnan had visited the Thakurani mines last month to probe the deal between JSPLand Sarada Mines.

Earlier,the state government had served notice to the lessee for the statutory violation. According to an enquiry report of the state government, the major benefit of the mine was flowing to JSPL. The present arrangement of selling ROM to JSPL by Sarda Mines amounts to transferring the interest in the mining lease to the steel company asper provisions of Rule 37 of MCR-1960, the report stated.

The arrangement also contributed to lower value added tax (VAT)collection by the state government on account of low pricing of ROMby the lessee compared to market prices.The Justice M B Shah Commission of enquiry during its visit to Odisha,had also found many irregularities in the operations of Thakurani mines spread over 947 hectares of Thakurani reserved forest.

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First Published: Mon, April 07 2014. 20:10 IST