-Mines business affected in Odisha- Unviability of mining due to mismatch between unrealistic MDPA targets & reserve scarcity .

By Bijay Mishra 
Bhubaneswar: 29-9-22

The recent issues on mining business in the Odisha state involving allegations on degrading of iron ore value against some mines companies  including key investors such as JSW are seriously affected the mining business in the state . 

Recently Mrs Aparajita Sarangi, MP , a veteran BJP leader alleged that there is a value degradation of iron ore at JSW’s two mines- Jajang and Ganua . 

However JSW sources claimed that , there  is an attempt to  damage the reputation of internationally credible company by levelling unauthentic  allegations. 

Sources confirmed  that JSW has been facing a huge loss from  these two mines.

The unviability due to mismatch between unrealistic MDPA targets & reserve scarcity has made the company rethink the ownership of mines. Earlier, it had already offered surrendering Jajang & Ganua mines in the past to the Odisha Government.

The entire process of mining including production and dispatch is conducted under the direct supervision of the State Government in a transparent manner. To streamline the process, the State Govt has framed the OMPTS Rule which stipulates a robust mechanism to ensure that the grade of the ore dispatched from the lease hold area is ascertained with accuracy.

Moreover, the reserve of Jajang mine is on the verge of depletion and hence the grade is degrading year-on-year basis. The total estimated remaining reserves (as on 31.03.2022) is 46.82 million Tonnes. Considering an annual ROM production limit of 12.8 MT, the life of mine (LOM) is anticipated to be about 3.5 years. To achieve the targeted ROM production,mining has to be carried out with the help of heavy mine machineries from the currently available mine faces/ benches. Hence, dilution of the ore is inevitable.

Since the Jajang mines is in operation for more than 6 decades, the high-grade ore has almost been exploited by the ex-lessee. Now only low-grade ore is left-out and is associated with BHJ/BHQ. Dilution is quite possible during the blasting.
Besides, un-diverted forest area is havinq about 20 MT of medium to high grade ore which cannot be exploited due to absence of Forest clearances. JSW has applied for forest clearance & waiting for final approval for it.

The mega investors such as JSW instrumental in generating high revenue for state exchequer seek  an investor friendly environment in the state. JSW paid the highest the total mining revenue that is Rs 12,210 crore in way of premium in FY’22 (upto March 31).  It was 52.5 % - lion’s share of the entire state mining revenue from auctioned mines. However, they rate facing gave challenges in terms of navigating through unnecessary controversies.

Some Sources said that the company had submitted a detail that the reasons for low-grade ore production are - The Geological Report (GR), prepared and submitted by ex-lessee to State Govt is based mostly on G2 level of exploration and hence there will be some variation between the actual resources and the GR.

This apart, the Junior Mining Officers (JMO) , Mining Officers, Deputy Director of Mines also conducted periodical and surprise visit and inspection of Mines, once in a week or so. There is a District Level Task Force (DLTF) comprise of the experts from respective fields (Mines, Forest, Environment etc.) conducts inspection of mines twice in a year. 

The State Level Enforcement Squad (SLES) constituted by director of mines, carried out surprise checks and visits.  SLES visited the Jajang and Gonua mine five times and three times respectively since commencement of mining operation. During inspection these committees have checked all statutory records, stacks, stock, screening & crushing plant etc. They also collected samples from bench faces and conducted screening and size analysis of ore. So far as grade of ore is concerned, the analysis of samples collected by SLES indicated that the same is in line with the quality reflected by Lessee during mining operation. Recently the SLES Team has conducted screening of ROM twice in last 3 months. It is verified that JSW carries out mining operation as per the mining plan and the Screened Fines & Lumps ratio are consistent with the Mining plan.

JSW Steel Limited is a public listed company having well established corporate governance. It said that, any baseless allegations may tarnish the image of the company. In view of this JSW requested that the mining operation be carried out by government agencies like OMC and let the grade/quality and lump-fine ratio of the ex-lessee be maintained.