The central government on Thursday urged the Supreme Court to revive the ailing mining sector, considering the cascading effect it is likely to have on the economy, especially in the aftermath of the coronavirus pandemic. Any further delay in allocation of mineral resources will have an adverse impact on mineral production, the ministry of mines told the apex court.

After the expiry of mining leases in 2020, till date 27 mines have been auctioned, of which 26 have started production, it said. The Odisha government has also initiated the auction process for Thakurani-B iron ore block in Keonjhar district, which has mineral reserves of approximately 275.49 million MT of high quality ore. Continuity of production from these mines will significantly contribute towards the supply of raw material to iron ore-based industries, it said.

The ministry’s response came on an appeal by Sarda Mines (SMPL) seeking direction to the Odisha government to execute a mining lease deed in its favour for the remaining 10 years of the 30-year renewal period it was entitled to under the terms of the Orissa High Court’s earlier orders of 1991 and 1998.

While the mining lease was sought with respect to the 947.046 hectare Thakurani B-Block Iron Ore Mines, the company has alleged that the state government has been failing to comply with the central government’s and high court’s repeated directions.

SMPL, which was a supplier of high-quality ore to the Naveen Jindal-led JSPL plant, had acquired the mining lease for 20 years from August 2001 to 2021 for the Thakurani iron ore mine. However, the environment clearance (EC) was granted only in 2004, and mining operations were stopped for want of EC beyond March 2014. In January 2020, SMPL had paid `933.60 crore for excess production of iron ore and resumed mining operations.

The government, while seeking impleadment in the case, said renewal beyond the stipulated period would be tantamount to following the old regime of first-come-first-serve basis and in defiance of the 2015 amended provisions that envisage public auctioning to ensure fairness and transparency and provide for a fixed tenure of 50 years for the mining leases. “ … the whole auction regime will fall flat on its face as the same do not find support of any of the provisions of the amended Act … tenure for grant of mining lease cannot be changed/ moulded as per the whims and fancies of the lessee,” the affidavit said. It said auctioning also ensures the best price for the minerals as the successful bidder has to pay additional revenue (auction premium) to the state government in addition to royalty.

If SMPL’s prayers are allowed, it will have “pan-India ramification”, solicitor general Tushar Mehta told the SC, adding that the earlier orders cannot be held to be binding now when there has been a change in law.

A Bench led by Chief Justice NV Ramana on Thursday sought a response from SMPL, which objected to the government’s impleadment in the case. Earlier, the apex court had asked the Odisha government to maintain status quo with regard to the mining auction and not to take any coercive action against the mining company till the next date of hearing.