India: A year later, half the auctioned Odisha iron ore mines fail to meet MDPA target

A year after it auctioned 19 new leases, the Odisha government is preparing to penalise half the mines for falling short of their despatch targets.

The penalty, it is feared, could run into hundreds and even thousands of crores for some lessees such as Serajuddin and Co who have only managed to meet 16.41% of Balda iron ore block's MDPA target.

Even steel players such as AM/NS and JSW Steel have failed to cross the 100 per cent mark. Of its four mines, JSW Steel failed to meet the despatch target of Jajang, falling short by about 15 per cent. AM/NS is short by less than 5 per cent, having despatched 4.2mt from Thakurani against the target despatch of 4.39 mt for the 12-month ending 27 July 2021.

Together these 19 mines produced about 69 % of their total despatch target. However, in many cases production or run of mine has exceeded the target but the lessee seems to have been unable to despatch as much.

Assessments of how much the state is owed is being done by individual mining circle offices; notices have already been issued to lessees in the Jajpur circle. The Joda and Koira divisions of the mining directorate are expected to send theirs soon.

A notice of Rs 613.57 crore was sent to Tata Steel for its Sukinda chromite block which despatched only half its expected volume. Its two other chrome mines produce far less but the company nonetheless has failed to meet MDPA expectations there too, achieving 80.05% of its despatch target for Saruabil Chromite Block and 11.65% for the Kamarda Chromite Block.

The penalties are also a factor of the premium which in the case of these mines averaged to a little north of hundred percent. MDPA liabilities may lead to some lessees surrendering their mines. Serajuddin has moved court already as SteelMint reported on 17 Jul'21.

Narbheram Steel and Power has only despatched 28.54% of its target for the Roida-II iron ore block, Ghanashyam Mishra and Sons has achieved 44.37% at Gorumahisini iron ore block and Jagat Janani Services 5.06% of Jaribahal's target. PM Granite Export which had bagged a manganese mine only despatched 6.30% of its expected target.

Details of Despatch from New Auction Mines in FY21