The Odisha government has penalised ₹341 crore to three mining leaseholders in the state, including ₹298.54 crore to steel giant JSW, ₹37.1 crore to Patnaik Minerals and ₹5.42 crore to Yazdani Steel and Power Limited for allegedly downgrading iron ore quality.
This came months after Bharatiya Janata Party (BJP) MP Aparajita Sarangi alleged that iron ore mines leaseholders in Odisha were deliberately downgrading the ore to evade export duty as well as tax payable to the centre and state in the last three fiscals.
Of the 19 iron ore and manganese mines in Odisha which were auctioned in 2020, following the amendment of the Mines and Minerals Development Regulation Act, 2015, a three-member committee, including the director of mines and a representative of the Indian Bureau of Mines visited three such mines and found them to be guilty of downgrading the ore quality.
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The committee penalised steel giant JSW for downgrading its iron ore quality at the Narayanposhi iron and manganese ore block in the Koira mining circle in the Sundargarh district. JSW won the block with 190 million tonnes of iron ore in February 2020 auction at a premium of 98%.
{{/usCountry}}The committee penalised steel giant JSW for downgrading its iron ore quality at the Narayanposhi iron and manganese ore block in the Koira mining circle in the Sundargarh district. JSW won the block with 190 million tonnes of iron ore in February 2020 auction at a premium of 98%.
{{/usCountry}}“Drop of grade is observed. Crusher was not shown as running during the inspection. But from the circumstantial evidence, crusher seems to be in operation,” the probe committee reported.
Similarly, Patnaik Minerals, which won the Mahulsukha iron and manganese block in the same circle in February 2020 at a premium of 92.7% was also penalised. “Drop of the grade was observed. Screening plant found in operation violating conditions in mining plan and consent to operate order,” the committee reported.
And the third penalty to Yazdani Steel and Power Limited (previously known as Yazdani International) which operates the Kolmong Iron Ore and Manganese block in the same circle over similar findings.
Representatives of the three leaseholders refused to comment on the penalty saying they have filed an appeal before the revisional authority of the mines ministry. “As far as the demand of ₹298 crore is concerned, the company has already got a stay on the demand,” said a JSW official refusing to be named.
Last year BJP MP Sarangi alleged that many of the iron ore leaseholders who had won the lease through auction in 2020 were deliberately downgrading the ore quality to evade export duty.
She alleged that though Odisha’s share of low-grade iron ore (with Fe content less than 58%) export from the country was just about 23.4% in 2018-2019, in the next three fiscals it hovered around 70%.
Sarangi alleged that if the grade of ore is lowered from 65% and above Fe to below 58% Fe in 1 lakh tonnes of mining of iron ore lumps, the loss to the exchequer would be ₹62.61 crore for every 1 lakh tonne.
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Considering that the share of export of low-grade iron ore from Odisha has gone up from 8 % to over 70 %, the loss would be in several thousands of crores, she said.
A former official working with the mining department alleged that during the pre-auction period of 2019-20 the proportion of low-grade ore in the state mines used to be substantially lower.
Director of mining Rajesh G refused to comment on the allegations as well as the findings of the probe committee.
However, Brahma Mishra, president, Utkal Chamber of Commerce and Industries, a prominent industry body, said one needs to see if the leaseholders are involved in downgrading.