India: Odisha to Scrap Leases of Erring Miners?

The Odisha government today made it abundantly clear that it would not be guided by any laxity while collecting the compensation pending on the errant miners.

"Miners need to pay the amount. It's the Supreme Court order and they cannot defy it. Those who cannot pay will face action like determination of leases. The state government also has other options like freezing assets and bank accounts of the leaseholders", said a senior state government official.

He said, the state government is now in the process of consulting its Advocate General to slap the ultimatum on the erring leaseholders who are yet to make payments. This comes barely three days after the Supreme Court instructed the Odisha government to carry on its job of penalty collection and take punitive measures like abrogating leases and confiscating the assets of miners who do not comply.

After the Supreme Court order of August 2, 2017 in the Common Cause case pertaining to rampant illegal mining in the state, the Odisha government noticed 131 iron and manganese ore miners, seeking to extract Rs 17576.17 crore from them for flagrant violations of limits of production set under environment clearance (EC). The cost of recovery for overproduction of ore was done as per the calculation of the apex court appointed central empowered committee (CEC) which derived its figure on IBM (Indian Bureau of Mines) prices.

But, all miners did not pay the compensation. As of now, the state government has managed to realise Rs 10,189 crore. This means around Rs 7000 crore of penalties are waiting to be recovered. A couple of merchant miners like Aditya Birla Group promoted Essel Mining & Industries Ltd and Odisha government controlled Industrial Development Corporation (IDCOL) have paid their share of compensation after the December 31 deadline.

As many as 44 leaseholders are yet to cough up the compensation amount. Among the working mines, Mideast Integrated Steels Ltd (Rs 924.75 crore) and Serajuddin & Company (Rs 748 crore) were the key defaulters. If one counts the non-working mines, Sarada Mines was the major defaulter saddled with a recovery amount of Rs 1938 crore.

Non-payment of penalties within the stipulated December 31 deadline has led to shut down of seven iron ore mines in Odisha whose combined annual production capacity runs into 23 million tonnes. In the January-March quarter of this fiscal, the deficit in iron ore output in the state is pegged at around three million tonnes.

The shortage of iron ore has led the prices of fines and lumpy ore to spiral. Both Odisha's merchant miners and the country's largest producer National Mineral Development Corporation (NMDC) have hiked prices by Rs 400-500 per tonne in January, but kept prices unchanged for February.