If the court takes a decision on the lines of its ruling on mining in Goa last week cancelling all mining leases running on deemed extensions and asking the state government to formulate a new policy and give out fresh licences the domestic steel industry will be hit hard.
The apex court, while reserving its orders on a PIL filed by NGO Common Cause, held that deemed mining licences cannot be valid for more than 20 years and must stop mining till the government passes specific orders to renew them.
According to the MB Shah Commission, of the 185 mining leases of iron and manganese ore in Odisha, about 90 are functioning under deemed extension.
Apart from this, the commission had also found that a total of 130 lessees were found to have mined an extra 278 million tonnes (mt) of iron ore valued at Rs 45,403 crore without the requisite approval over a period of 10 years. State-owned Steel Authority of India, part from the private sector Tata Steel and Aditya Birla Groups Essel Mining appeared in the commissions list of companies that mined in excess between 1994 and 2005.
The Odisha government has already slapped a collective fine of around Rs 57,000 crore on 27 companies for mining beyond the allowed limit.
Any temporary suspension on mining in the state due to a cancellation of the deemed leases would not only affect the prospects of the miners but also the domestic steel industry for which iron ore is a key input.
Odisha contributed around 62 mt of iron ore to the countrys overall production of 140 mt during FY13.
Advocate Mukul Rohatgi, appearing for SAIL, opposed any immediate ban on iron ore mining. Similarly, additional solicitor general KV Viswanathan sought six months time to take a call on the grant of mining leases. He, however, suggested no ban in the national interest as it would hurt the steel industry and the economy.
The Odisha government submitted that the applications for renewal are at various stages of examination and, in some cases, the in-principle decision to grant the renewals have been taken and necessary follow-up action was under way.
Earlier, acting on the recommendations of the Shah panel report, the central government had said that rather than banning production of ore or cancelling mining leases, a more prudent approach would be to look into the alleged violations pertaining to every case. According to the government, the Odisha government has said that necessary measures had already been taken against illegal mining in the Joda circle. Similarly, the railways said it would take action in cases where it transported ore in excess of the limit eligible for lower freight and other duties.
To avert a crisis situation as occurred in the other two major iron ore producing states Karnataka and Goa, which had to face a ban on production the central government has agreed with the recommendations of the Shah panel to amend rule 24(1) of the Mineral Concession Rules, 1960, to provide that applications for the renewal of a mining lease shall be made to the state government at least 24 months before the expiry of the lease, contrary to the six-month period at present.