Row be­tween NMDC, cus­tomers over foun­da­tion fees

Resource Digest - - CONTENT -

State-run iron ore miner NMDC has asked cus­tomers such as JSW Steel, SKS Is­pat and Geradu, among oth­ers, in Kar­nataka to bear the cost of con­tri­bu­tions to the District Min­eral Foun­da­tion and Na­tional Min­eral Ex­plo­ration Trust (NMET).

NMDC runs mines in Ch­hat­tis­garh and Kar­nataka with an an­nual pro­duc­tion ca­pac­ity of a lit­tle over 30 mil­lion tonne (MT), to which the Don­i­malai sec­tor in Kar­nataka con­trib­utes around one-third of its an­nual pro­duc­tion. JSW Steel buys the lion’s share of the pro­duce from NMDC’S Don­i­mali mines to feed its plant in Bel­lary. NMDC sells all its pro­duce from Kar­nataka through the auc­tion route, but the base price it sets for its pro­duce is ex­clu­sive of all statu­tory dues like roy­alty, taxes, DMF, du­ties, levies etc. The com­pany sells its pro­duce from Ch­hat­tis­garh di­rectly in the open mar­ket, but here also, it has been charg­ing the same levies with­out any hue and cry from its cus­tomers, in­clud­ing Es­sar Steel, so far.

How­ever, the Kar­nataka buy­ers re­cently cre­ated a storm in­sist­ing that since they get the raw ma­te­rial through the auc­tion route, they were not sup­posed to pay the levies and taxes like their coun­ter­parts in Ch­hat­tis­garh. The prob­lem started brew­ing here re­sult­ing in stop­ping of despatches by the min­ers to its lo­cal cus­tomers for two days start­ing from Fe­bru­ary 2.

“As per sec­tions 9(B) and 9(C) of MMDR Amend­ment Act 2015, it is the holder of the min­ing lease who has to pay the DMF. The DMF has been in­sti­tuted for the de­vel­op­ment of the min­ing area. The Cen­tral Em­pow­ered Com­mit­tee (CEC) had also clar­i­fied that DMF is to be paid by the lessee and not the buyer,” said JSW Steel’s com­mer­cial di­rec­tor Jayant Acharya.

Fol­low­ing a govern­ment no­ti­fi­ca­tion in Septem­ber last year, which stated min­ers who were awarded leases be­fore Jan­uary 12, 2015 will have to con­trib­ute 30% of the roy­alty to the DMF, NMDC had re­quested the CEC, which con­ducts the auc­tions on be­half of the com­pany, to col­lect DMF and NMET from all cus­tomers in Kar­nataka since it was re­quired to pay that amount, on de­mand, to the state govern­ment.

On the CEC’S re­fusal, NMDC de­cided to col­lect DMF and NMET from the cus­tomers along with load­ing charges at the point of des­patch. Since the cus­tomers re­fused to bear the cost of con­tri­bu­tion to­wards DMF and NMET, NMDC stopped despatches from the Don­i­malai sec­tor.

“How­ever, con­sid­er­ing the in­con­ve­nience caused to steel pro­duc­ers, we have de­cided to dis­cuss the is­sue in the forth­com­ing board meet­ing. In the in­terim pe­riod, we have started despatches from to­day,” a se­nior NMDC of­fi­cial said.

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