SC Penalty on Illegal Mining in Odisha May Hit Output: Experts
Most cos still studying the verdict, which could also trigger similar claims in mineral-rich Jharkhand
Bhubaneshwar: The Supreme Court order slapping heavy penalties on companies for mining iron and manganese in Odisha without proper clearances can hit output and trigger similar claims in mineral-rich Jharkhand, industry experts said. The order pertains to 102 mines involved in what the SC termed as “a mining scandal of enormous proportions and one involving megabucks,” and could result in penalties of up to .₹ 25,000 crore.
Tata Steel, SAIL, Aditya Birla Group and other smaller groups have mining operations in Odisha, which produces nearly half of India’s iron ore.
The court, hearing a petition of NGO Common Cause, had ruled that any output in excess of, or without, environmental and forest clearances or approved mining plans was illegal and would invoke provisions of the mining law that allows the state to recover the value of all such output. Experts said the order could have wider repercussions if Odisha decided to recover dues from chrome mines in the state for similar violations, or if neighbouring Jharkhand decided to apply this order to errant mines in the state. Jharkhand’s demand orders had been stayed by courts. The total fine could exceed the .₹ 17,576 crore estimated by a panel set up by the court. The biggest violator, ironically, is the state government’s Orissa Mining Corporation, with production worth .₹ 2,177 crore said to be illegal.
These figures do not include production in violation of forest clearance, which is also a prerequisite for mining in addition to environmental clearance. This will also attract a penalty of 100 % of average value sold and is estimated to be about Rs 8,000 crore. A lessee would be penalised for only one of the two lapses.
Most companies were still studying the verdict and declined comment, but some called the order a “killer blow”.
“Did we take the material and sell it on our own, with paying royalty and taxes on it, without assessment carried out on it? How does it become illegal mining?” said Prashant Ahluwalia, MD, KJS Ahluwalia Group. His lease to a mine producing 5.6 million tonnes of ore annually is valid till January 2020, making him better placed to pay the penalty than many small miners whose leases also expire then.
Tata Steel and SAIL did not respond to mails seeking comments till the time of going to press. Mine owners said the penalty would affect cash flow and impact production at least till December.
“We haven’t taken any decision. I am yet to receive a certified copy of the order,” Deepak Mohanty, director - mines, Odisha, said.