SC Order on Odisha Illegal Mining - How will it Impact Indian Iron Ore Industry ?
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Honorable Supreme Court of India has issued judgement today on illegal iron ore mining case in the state of Odisha. In a common cause notice issued to Odisha based merchant miners, they were alleged of excess production beyond the granted EC (Environmental Clearance) limits. Another specific issue involved in the case hearing is impact of Rule 37 of the Mineral Concession Rules, 1960.
The apex court has imposed 100% penalty on price of the mineral as rationalized by Central Empowered Committee (CEC). As per CEC report 16 Oct’14 the figure for recovery issued to the lessees exceeded INR 61,000 crore.
CEC notional value as per report on 16 Oct’14
| Sl. No. | Name of the lessee | Total quantity produce without/in excess of environmental clearance | ||
| Iron (In Lakh MT) | Manganese (In Lakh MT) | Notional Value (Rs.in Lakh) | ||
| 1 | OMC Ltd | 260.219 | 0.28 | 217795.73 |
| 2 | Sharda Mines(P) Ltd. | 213.64 | 0 | 193885.69 |
| 3 | Esssel Mining & Industries Ltd. | 196.805 | 0 | 110263.33 |
| 4 | BPME Ltd. | 116.716 | 0 | 83807.76 |
| 5 | R P Sao | 107.614 | 0 | 112700.87 |
| 6 | TISCO Ltd. | 94.526 | 12.584 | 61441.3 |
| 7 | OMDC Ltd. | 94.199 | 0 | 64294.27 |
| 8 | M/s Serajudin & Co. | 86.784 | 0.225 | 75524.39 |
| 9 | Mideast Integrated Steel Ltd. | 84.334 | 0 | 92475.24 |
| 10 | KJS Ahluwalia | 71.776 | 0 | 71919.42 |
| 11 | Rungta Mines Ltd. | 63.414 | 0.623 | 29141.7 |
| 12 | Patnaik Minerals (P) Ltd. | 58.222 | 0 | 48013.71 |
| 13 | BICO Ltd. | 52.396 | 0.0268 | 43870 |
| 14 | Runga Sons (P) Ltd | 51.392 | 0.221 | 36679.1 |
| Total | 1552.46 | 13.962 | 1241812.46 | |
Source: CEC report of mining leases in Orissa, 16 Oct'14
On 21 Apr’14, Mr. Prashant Bhushan on behalf of the NGO, Common Cause, filed a petition in the SC seeking action against leases indicated by the MB Shah Commission on illegal mining. A committee named Central Empowered Committee (CEC) was constituted to conduct an exhaustive study of illegal mining in state of Odisha.
According to CEC the notional value of the minerals produced without an environmental clearance or in excess of the environmental clearance, at the weighted average price of the minerals as proposed by the Indian Bureau of Mines comes to about INR 17091.24 crores for iron ore and INR 484.92 crore for manganese ore making a total of INR 17576.16 crore.
What does SC judgment mean ?
1. Regarding total area that can be acquired during operation, CEC examined case of 7 mining lease holders namely - Essel Mining, Rungta Mines, Rungta Sons, Bonai Industrial Company, Feegrade & Company. M/S Mangilal Rungta and Jindal Steel & Power.
2. The eight mining lease holders that violated Rule 37 of the MCR are - RP Sao, Indrani Patnaik, KJS Ahluwalia, Aryan Mining & Trading Corporation, Mideast Integrated Steel, Kavita Agrawal Manganese ore mines, Mala Roy and M/s Sarda mines
3. Compensation should be payable from 2000-2001 onwards at 100% of the price of the mineral as rationalized by the CEC. The amounts as due from all mining lease holders should be deposited by them on or before 31 Dec’17. Subject to and only after compliance with statutory requirements and full payment of compensation and other dues, the mining lease holders can restart their mining operations.
4. Case regarding lifting of iron ore stock from Sarda mines and case on Essel Mining will be listed separately after two weeks so that a convenient date of hearing can be fixed.
Impact on iron ore industry - SteelMint analysis - In talk with miners and market participants SteelMint learned that the miners shall continue to operate till 31 Dec’17. However they will be able to restart mining operations only after compliance with statutory requirements and full payment of compensation and other dues, the mining lease holders can restart their mining operations.
This might lead to aggressive selling by Odisha merchant iron ore miners in the near term.
