Mining Scam - Odisha suffers Revenue loss of over Rs.10,000 crore

By C R Sahu
Bhubaneswar , 15-9-22

There is Revenue loss of over Rs.10,000 crore to State of Odisha in FY 22 due to huge manipulation of grades of iron ore in auctioned mines of Odisha . 

Some lessees of auctioned mines are adopting a number unhealthy business practices at mines like declaring grade lower than actual grade in production and dispatches of iron ore.The Indian Bureau of Mines, GoI vide letter No.16/74/2022-Mines/VI dated 31.08.2022 has pointed that some of the leaseholders in the State of Odisha and the State of Karnataka are reporting more production and dispatch in the grades less than 55%Fe at very low ex-mines prices.

As per IBM study, drastic change in grade wise reporting pattern of the production and dispatches by some leaseholders especially auctioned mines and more so after incorporating lower grades in the monthly return format is the portal.

It has been apprehended in the above study report that this is  due to some malpractices adopted by the lessees showing higher quantities in lower grades and to reduce the ASP published by IBM, and thus reduce the payments like premium, royalty, DMF and NMET to be made to the State Governments which is directly linked to ASP.

As per section 23C of MMDR Act, the State Governments are empowered to make rules for preventing illegal mining, transportation and storage of minerals, SOPs may be framed. Investigation through authorised agency under section 18A of the Act may be considered for obtaining information on available grades of iron ore in the leases.

In Jajang iron ore mine , the share in lumps production has fallen from 22% in FY20 (prior to auction) to 16% in FY21 (post auction) and 8% in FY22. Post auction, the lumps production has been shown in lower bands only of 55-58% and below 55%Fe. It is estimated that the State Government has lost revenue of over Rs.2,500 crore from Jajang iron mine of JSW Steel Ltd.
 In Nuagaon iron ore mine , the  share in lumps production has fallen from 29% in FY20 (prior to auction) to 18% in FY21 (post auction) and 12% in FY22. There is estimated revenue loss of over Rs.1,600crore from Nuagaon iron ore mine in FY22 due to heavy manipulations.

In Narayanposhi iron and manganese mine , the  share in lumps production has fallen from 41% in FY20 (prior to auction) to 24% in FY21 (post auction) and 4% in FY22. There is estimated revenue loss over Rs.1,900 crore from Narayanposhi iron and manganese mine.

In Ganua iron ore mine the share in lumps production has fallen from 37% in FY20 (prior to auction) to 12% in FY21 (post auction) and NIL in FY22. There is estimated revenue loss of over Rs.500crore due to heavy manipulations.

Similar practices have also been adopted from other auctioned leases . 

In Gorumahisani iron ore mine , the share in lumps production has fallen from 57% in FY20 (prior to auction) to 1% in FY21 (post auction) and 49% in FY22. There is sudden change in grades of dispatches for the same mine after auction and huge dispatches of low-grade ore post auction. 

In Badampahar iron ore mine , the share in lumps production has fallen from 82% in FY20 (prior to auction) to 13% in FY21 (post auction) and 39% in FY22. Huge surge in dispatches of low grade have been noticed.

In  Jaribahal iron ore mine, the share in lumps production has fallen from 44% in FY20 (prior to auction) to 21% in FY21 (post auction) and 25% in FY22. Huge surge in dispatches of low grade have been noticed.

In Roida II iron ore mine, the share in lumps production has fallen from 23% in FY20 (prior to auction) to  8% in FY22. Huge surge in dispatches of low grade have been noticed.
 
The above facts indicate there is going on another big mining scam by lessees of auctioned mines as happened in 2007-2014 inviting another Shah Commission and Court Matter WPC 114 of 2014 (Common Cause vrs Govt. of Odisha). This will lead to closure of many mines due to huge manipulations and inaction of the State Government.
 
Keeping the above in view, Mr Bijay Parida  , 

President, Jana Adhikar Parisada in a letter to the Principal Secretary , Steel & Mines Department , Government of Odisha , demanded  that the revenue loss of over Rs.6,500crore may be recovered from JSW Steel Limited for the huge manipulation of grades and low dispatches of lumps. The leases of Nuagaon iron ore mine, Jajang iron ore mine and Ganua iron ore mine of JSW Ltd may be terminated as gross violations have been observed in these leases. Similar action may be taken against other leases of auctioned mines to ensure scientific development of mine and legal transportation of minerals. Also, appropriate order may be passed under section 21(1) and section 23 MMDR Act to ensure scientific development of mineral blocks and sustainable revenue generation for the State.