India: KJS Ahluwalia moves high court seeking more time to clear iron ore inventories
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The former lessee of Nuagaon iron ore mines in Odisha, KJS Ahluwalia, has moved the High Court of Orissa seeking six more months on grounds that Covid19 and monsoons had hampered despatch.
This comes a day after Goa's miners were granted extra time by the Supreme Court on similar grounds. Until 31 March 2020, KJS Ahluwalia held mining rights to the 767.284 ha iron ore mine bagged by JSW Steel on commitment of 95.2 percent in premium. Under MCR Rules 2016, lessees can get six months and seek an additional month thereafter to dispatch already mined material. In the case of the 24 operating mines auctioned this year, this period comes to an end on 31 October 2020.
Act of God
Mining rules also contain a "force majeure" clause (12(1) (ff)) that can be invoked for more time in case of an 'act of god', war, rioting or any event that was beyond the control of the lessee. According to KJS Ahluwalia since the pandemic was an act of god, the miner deserves an additional six months to despatch 3.8mn t of high grade ore which it is only being able to move out at the rate of 11600 t per day.
However, it failed to convince the state government whose 1 Oct 2020 notice only gave it until 31 October 2020 to clear its material. KJS Ahluwalia's petition, reviewed by SteelMint, claims the notice was "ex facie illegal, unsustainable and bad in the eyes of the law." To back it the petitioner has referenced various Covid19 related orders and guidelines, issued by the state and centre, restricting movement and social gathering across the country and even in the mining district of Barbil where it operates. The matter is to be heard again on 5 November.
Mining under essential list
The move to seek more time is likely to be met with resistance from both the state and new lessees. A dozen others, including Ghanshyam Misra, Rungta Mines, BICO and Feegrade, Serajuddin, KMC, KN Ram and Essel Mining had also written to the state seeking between 1-7 additional months.
JSW Steel and AM/NS have already blamed their inability to ramp up on the high volumes of despatches of old lessees. They too could blame "force majeure" in failing to meet the required target of 80 per cent of previous volumes at the end of the fiscal year.
SteelMint has learned that the Odisha Government has weighed in on this possibility and its potential impact on revenues and supply of ore. It has also concluded that the provision is only available to an existing lessee. Both the Ministry of Home Affairs and state government had exempted mining operations from restrictive Covid19 measures as early as 25 March 2020 and 27 March 2020 respectively.
In September the Mines directorate had estimated stocks of 28.037 mn t of iron ore and 44,094 t of manganese and 21, 732 t of chromite as on 1 Oct 2020. It expects 11 out of the 24 previous lessees to liquidate their stock before 31 October, and sees no justified ground for the others not to do so. The remaining ore is likely to be confiscated by the state and auctioned through OMC.
