ET: HC to hear petition alleging Odisha government’s move to favour Tata Steel

6 March 2019:  A petition in the High Court of Orissa requires the state government to explain why it seeks to grant Tata Steel further iron ore mines when the steelmaker already has captive mines well above the prescribed cap. 

The HC is hearing a petition challenging the Odisha government’s recommendation to increase the prescribed area cap allowed to an individual player, from 10 sq km to 75 sq km. The matter will be heard again on 25 March 2019. 

The move will allow Tata Steel to participate in auctions. The PIL argument is that this would grant Tata Steel, already the beneficiary of a “disproportionate allocation of natural resources in the state”, an unfair advantage over other steelmakers in the state. Tata Steel already hold rights to area nearing 50 sq km, “which is 89 per cent of the total mining lease (area) ever allocated to steel companies,” claims the petition.

The Mines and Minerals (Development and Regulation) Act 1957, amended in 2015, sets 10 sq km as the limit for mining rights granted to an individual in a state. This may be relaxed for an individual, as has been done for Tata Steel and state-owned Odisha Mining Corporation and as long as the state justifies the grant. This time however, Naveen Patnaik’s government chose to ask the Centre for a sevenfold increase in the area limit itself.

The current PIL in the High Court of Orissa has been filed by journalist Bijaya Kumar Misra but this isn’t the first time that Tata Steel’s efforts to secure future raw material in the state has been challenged. Rival steelmaker JSW had moved the High Court of Delhi last year against Tata Steel’s participation in two tendered iron ore blocks that have since been withdrawn.

According to state officials, the Mineral Auction Rules 2015 is silent on the subject of total area, covered under Section 6 of the MMDR Act.

It has been almost a year since the Odisha government wrote to the Centre to increase this limit. The Centre, which has expanded the cap for bauxite allowing state-owned Nalco to operate a second mine and expanded similarly the cap for limestone mines in Maharashtra, has been unmoved by Odisha’s request. A senior official at the state’s directorate of mines, who asked not to be named, said the ball was still in the Centre’s court.

Tata Steel, which has captive rights to chrome, iron ore, and manganese in the state going back almost a hundred years, only commissioned its first steel plant in the state in November of 2015. It is currently ramping up the 3 mt plant at Kalinganagar to 8 mt per annum and has similar expansion plans for Bhushan Steel’s 5 mt plant in Angul which it acquired under the Insolvency and Bankruptcy Code. It currently about half a dozen iron ore mines in the state that also serve its Jamshedpur plant’s needs. Some of these will lapse in 2030.

While the HC of Delhi was still hearing the matter, the Odisha government decided to withdraw it notice inviting tender for Chandiposhi (of 33.7 million tonnes reserve) and Purheibahal (38.3 mt) iron ore deposits, rendering JSW’s petition infructuous. According to officials at the state directorate, at least 17 deposits ready to be auctioned have been withheld for now. But for a combined prospecting and mining lease, the state is yet to actually grant a lease for any of the five deposits auctioned since 2015.

Defending the state government’s right to lobby for the steelproducer, he said “Here’s a plant that has been put up, and is visible before our eyes. Is its wrong for the state to encourage value addition within the state? Unfortunately the state government could not grant Posco the Khandadhar deposit, before the act was amended.”.

Odisha, the country’s biggest producer, is also home to several sick steelmakers that it failed to supply captive raw material to. In 2012 the Supreme Court had ruled that Odisha had been “highly unreasonable and arbitrary” in denying Bhushan Power and Steel a promised iron ore deposit the huge sums the firm had invested in a steel plant. BPSL,recently acquired by Sajjan Jindal’s JSW under insolvency proceedings, and Bhushan Steel emerged successful bidders, for two iron ore mines auctioned in Odisha, only a month before being declared insolvent. This has also been challenged in the court.

The Economic Times reported

Categories: General News, India Bankruptcy


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