Odisha orders itensified crackdown as audits flag massive mining losses

State directs surprise inspections and tighter surveillance after audits and investigations flag large-scale illegal mining, royalty evasion and mineral transportation irregularities

With audit findings and field-level investigations flagging possible irregularities exceeding ₹20,000 crore in recent years, the Odisha government has ordered an intensified crackdown on illegal mining, unauthorised transportation of minerals, grade manipulation and royalty evasion. It has directed field officials to launch surprise inspections, strengthen surveillance and initiate stringent legal action against violators.

 

In a recent directive, reviewed by Business Standard, the Steel and Mines Department asked the Director of Mines and Geology to intensify enforcement measures across mineral-bearing regions and warned against illegal extraction, transportation without valid permits, suppression of production figures and under-reporting of mineral grades.

 

The move comes against the backdrop of a series of findings by the Comptroller and Auditor General (CAG) and local inquiries that have exposed large-scale discrepancies in mineral extraction, valuation and royalty collection across Odisha's mining sector.

   

Collectively, these findings suggest that the value of illegally extracted minerals, excess production beyond statutory limits, undervaluation of dispatched ore and non-recovery of government dues could exceed ₹20,000 crore over the last few years. The figure includes unlawful mining worth ₹5,467 crore flagged by the CAG due to violations of environmental clearance conditions, an estimated ₹4,162 crore loss linked to alleged undervaluation and grade manipulation in iron ore transportation, ₹3,966 crore in dues yet to be recovered from illegal mining operations, and minor minerals with a royalty value of ₹4,624.58 crore allegedly extracted and utilised in public works between 2015 and 2022 without adequate proof that they had been procured from authorised sources.

 

Stressing that some lessees may be indulging in, or trying to indulge in, illegal mining, extraction, transportation, storage and trading of minerals despite existing measures, Deoranjan Kumar Singh, additional chief secretary, has asked Rohit Kumar Lenka, director of mines and geology, to ensure that all field functionaries intensify monitoring, inspection and enforcement to effectively prevent, detect and curb all forms of illegal mining and mineral-related irregularities. "Such activities, if allowed or left unchecked, may result in substantial loss of government revenue, adversely affect conservation of mineral resources and undermine the regulatory framework governing the sector," Singh pointed out.

 

The department has instructed field officers to undertake surprise inspections of mines, stockyards, crusher units, railway sidings, ports and transportation routes to detect unauthorised extraction and movement of minerals. It has called for stricter monitoring of production and dispatch data to prevent excess extraction beyond approved limits, concealment of output and manipulation of mineral grades that can substantially reduce royalty liabilities.

 

According to the directive, monthly enforcement reports detailing inspections, seizures, penalties and prosecutions will now be closely monitored. District authorities have been directed to verify transit permits, track mineral-carrying vehicles through digital systems and initiate prosecution, seizure and recovery proceedings wherever violations are detected.

 

"The field officers should closely monitor production, dispatch and stock positions to detect suppression of facts, unaccounted extraction and discrepancies in reported quantities. Particular attention should be given to unauthorised excavation of minerals, including iron ore, manganese, coal, chromite, bauxite and other minerals, mining beyond approved lease boundaries, extraction in non-leased areas and production in excess of approved limits or statutory permissions," it stated.

 

Odisha, India's largest producer of iron ore and chromite, derives a significant share of its non-tax revenue from mining. The state has accumulated over ₹31,000 crore in District Mineral Foundation (DMF) fund collections since 2015, the highest in the country, reflecting the scale of mining activity. However, successive audit reports have pointed to gaps in enforcement, delayed recoveries and weak oversight mechanisms that have enabled large-scale irregularities despite a robust regulatory framework.

 

The government has asked officials to focus on unauthorised extraction of minerals, preventing transportation without valid transit permits, the use of forged documents and the movement of minerals through unauthorised routes. Officials have also been directed to set up a robust monitoring mechanism at the directorate level for periodic review of enforcement activities and effective supervision of field functionaries.

 

"A consolidated monthly progress report (MPR) on enforcement activities should be furnished to the department within the first week of every succeeding month, indicating inspections conducted, violations detected, seizures effected, penalties imposed, prosecutions initiated and revenue realised," the directive stated, underlining the need to immediately flag major cases involving large-scale illegal mining or mineral-related irregularities.

 

The state government has also warned that negligence or failure to act against violations will attract disciplinary action against responsible officials. "Any negligence, laxity, omission, failure to take timely action, deliberate overlooking of violations or dereliction of duty noticed at any level will be viewed very seriously and responsibility fixed. Exemplary departmental, disciplinary and other action, as deemed fit, will also be initiated against the erring officials without exception," the directive added.

 

Major findings

 

According to a CAG report tabled in the Odisha Assembly last year, minor minerals with a royalty value of ₹4,624.58 crore were extracted and utilised in public works between 2015 and 2022 without adequate proof that they had been procured from authorised sources.

 

The audit estimates a loss of ₹864.45 crore towards royalty-linked collections, District Mineral Foundation (DMF) contributions and Environment Management Fund (EMF) dues.

 

Another CAG audit flags the state's failure to recover ₹3,966.34 crore from leaseholders involved in illegal mining operations despite Supreme Court directions.

 

The CAG reported unlawful mining worth ₹5,467 crore arising from violations of environmental clearance norms and mining beyond approved limits. It recommended recovery of ₹1,699 crore from operators.

 

Official assessments indicate a potential revenue loss exceeding ₹4,162.79 crore due to alleged undervaluation and misclassification of iron ore transported through key mining corridors.