The Supreme Court has directed the Orissa government to recommend the case for grant of iron ore reserves to the central government for the Bhushan Power & Steel?s 2.8 million tonne-integrated steel plant at Lapanga, Orissa.

Setting aside the Orissa High Court judgment that refused to interfere with the state government?s decision asking Bhushan Power & Steel (erstwhile Bhushan) to sign a fresh MoU, a bench headed by Justice Altamas Kabir said that since the state government had already made allotments to others in relaxation of the Mineral Concession Rules 1960, ?no cogent ground has been made out on behalf of the state to deny the said privilege to the appellants (BPSL) as well.?

It further noted that Thakurani Block has large reserves if iron ore, in which Bhushan can also be accomodated, while directing the Orissa government to take appropriate steps to act in terms of the MoU signed with the firm on May 15, 2002.

Besides, it also set aside the state government?s decision of February 9, 2006 that rejected the firm?s claim for grant of mining lease on the ground that the former had acted arbitrarily in requiring Bhushan to enter into a separate MoU, notwithstanding the existence of the MoU of May 15, 2002, which had been acted upon by the parties.

The Orissa government during its arguments had stated that the issue relating to MoU did not survive as the members of the Bhuhan group had already settled the disputes and it would make recommendation to the Central government for grant of iron ore mines to BPSL. Jindal Steels had also submitted that as long as any new allotment did not impinge its rights, it did not have any objection to allotment of mining areas to BPSL.

Stating that the state was obliged to make recommendation to the Centre for grant of iron ore mines, BPSL had claimed that its integrated steel plant has been operational since 2005 and it had invested around R18,000 crore

According to the company, it has been incurring losses since it has no captive mines and is forced to purchase irons ore from the market at five times the normal rate.

Bhushan Group of Industries had signed a MoU with the Orissa government on May 15, 2002 for setting up a 2.8 million tonne steel plant in the state.

Under the MoU, the state government was supposed to recommend to the Central government for grant of mines to Bhushan for its steel plant and the total requirement of 224 million tonne was to be met from the Thakurani mines and the Keora area.