India: Serajuddin Mines Operating at 50% of Rated Capacity - Sources

Even after reviving operations, Serajuddin is operating its Balda iron ore mines at barely 50 percent of its available capacity. Serajuddin operates one of the largest merchant mines in Odisha with an approved EC (environment clearance) limit to extract 15 million tonnes of iron ore in this fiscal.

But, the lessee is unable to operate all its mining pits due to issues related to renewal. Odisha government sources said, paperwork for Serajuddin is ready and recommendation has already gone from the directorate of mines but final approval from the government is pending. The lack of requisite approval has throttled iron ore production at its mines.

The Balda iron ore mines of Serajuddin lapsed on December 2 last year. The lessee has already applied for renewal in advance.

However, in the intervening period, Serajuddin got entangled in a case lodged with the National Green Tribunal (NGT). The tribunal had asked the Ministry of Environment & Forests & Climate Change (MoEFCC) to probe into the allegations of extracting iron ore by the lessee in violation of environmental norms. The NGT stricture is believed to have delayed the routine renewal process.

Serajuddin & Company was given the go-ahead to mine in 24.446 hectares of rural forest land, 113.73 hectares of deemed forest land and 33.192 hectares of non-forested land till December 2, 2017.

Serajuddin & Company and state-owned Industrial Development Corporation Ltd (IDCOL) have resumed mining operations after a transient shutdown. Both miners were amongst the seven working iron ore and manganese lessees whose operations were stopped by the Odisha government on January 1 as they failed to cough up the penalty amount ordered by the Supreme Court. The apex court had set the December 31 deadline for mine leaseholders to pay off the dues for illegal extraction of iron and manganese ore between 2000-01 and 2010-11.

Both Serajuddin & IDCOL had paid their share of compensation beyond the stipulated timeline. The Supreme Court after hearing the plea by miners had condoned the delay in payments and allowed them to turn their mines operative again.

Serajuddin reviving its iron ore mines is a huge relief to the steel and other end-user industries. Higher iron ore production in Odisha triggered by the reopening of Serajuddin's mine and the expected resumption of Essel's Koira and Jhilling-Langalota mines is expected to soften iron ore prices in the near term. First Odisha's merchant miners and taking cues from them, NMDC, the single largest iron ore mining entity, had raised prices disproportionately, riding on an artificial iron ore shortage scenario created by the suspension of seven working mines in Odisha. Of late, NMDC has cut prices marginally by Rs 100 per tonne. Odisha's miners are likely to follow suit and cool prices as they negotiate and tie up the next sales contracts with their buyers.

Despite the temporary shutdown of some mines, Odisha's iron ore production is on a roll. By the first week of March in this financial year, the state has already produced 99 million tonnes. Judging this growth momentum, Odisha looks favourably poised to close FY18 with an iron ore production in upwards of 100 million tonnes.