The inside story of excess iron ore mined in Odisha

Written by Prashant Mukherjee | New Delhi | Updated: Feb 16 2014, 05:47am hrs
Iron oreShah panel: Essel Mining extracted in excess of 32 MT; Tata Steel 26 MT. Reuters
The countrys top corporate houses and a public sector company have been found guilty of excess mining of iron ore in Odisha by the Justice MB Shah Commission. As per the report of the commission, which was tabled in Parliament last week, a total of 130 lessees were found to have mined extra 278 million tonnes iron ore valued at R45,403 crore without the required approvals over a period of 10 years.

State-owned Steel Authority of India Ltd, Tata Steel and Aditya Birla Groups Essel Mining appeared in the commissions list of companies that mined in excess over the period spanning between 1994-2005. The Odisha government has already slapped a total fine of around R57,000 crore on 27 companies for mining in excess than permitted, which has been challenged by the companies of the mining tribunal in the ministry of mines, government of India.

While SAIL has been found to have mined 8.2 million tonnes (MT) excess iron ore during the period, Tata Steel mined 26 MT more than permitted. Both these companies have captive iron ore mines in the state and use the iron ore for making steel. Aditya Birla Groups Essel Mining, which is a merchant miner, has been found to have mined 32.3 MT extra, while the state governments Orissa Mining Corporation (OMC) mined 16.1 MT extra. A Jharkhand-based private miner, Rungta Mines, mined 12.65 MT extra.

A mining lease of say 20 years imposes annual production limits on the companies, which can be revised if the company gets an environmental clearance for the same. Officials said the cap is there to protect the environment. As and when better technologies are employed that reduce pollution levels, the quantum is raised.

Industry officials explained that the windfall gain from the excess mining would have been more for merchant miners rather than steel makers like SAIL and Tata Steel. This is because the two steel makers are not allowed to sell iron ore in the open market.

When contacted to explain why the company mined in excess than what was permitted, a Tata Steel spokesperson said, Since the full report is not in the public domain yet, we are not in a position to comment.

Industry experts explained that excess mining by SAIL or Tata Steel is technical and should be seen differently than those by merchant miners.

A SAIL official said the company has a wet processing technology for excavating and processing the ore. Under it, only 80% of the ore produced is usable. The balance is a waste product, which is basically low quality ore that is stored in reservoirs. If a company requires, it is sometime used in steel making.

Tuhin Mukherjee, Essel Mining MD, said, We have not seen the report and it will be very difficult to make any comment. But we have not violated any norms; we have taken permission from the state government and paid royalty every year.

At present, miners pay a royalty of 10% on ad valorem basis to the state government. Prior to 2009, the miners paid royalty on tonnage basis.