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

The Economic Times - - Economy: Macro, Micro & More - Meera.Mo­hanty @times­

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.

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