Odisha Govt loosing Rs.2,40,000 Crores revenue for impermissible extension of renewal of Mining lease of TATA STEEL

-Odisha Jana Adhikari  Parisada demanded  Cancellation of Tata  lease and mines should be put to auction- 

By our Correspondent 
Bhubaneswar, 07-9-21

The State Govt is losing and will continue to lose at least Rs.2,40,000 Crores assuming the per tonnage value of ore @6000/- till March, 2030 due to the impermissible subsequent extension of renewal of Mining lease of TATA STEEL till March, 2030 u/s 8(5) of the MMDR Act, 2015 .

Submitting a petition  to the State Govt. , veteran social activist and President  “ Odisha Jana Adhikari  Parisada ” Mr Bijay Parida told that , Tata Steel had never applied for exclusive captive usage for 3rd renewal of its five mines namely Joda West, Joda East, Khandbandh, Bamebari and Katamati in the Form-J u/r 24A of the MCR, 1960 . The  State Govt should not have assumed that the Tata Steel is entitled for renewal u/r 24(B) of the MCR, 1960 while allowing the 3rd renewal under the captive category. The subsequent extension till March, 2030 u/s 8(5) of the MMDR Act, 2015 is impermissible as they do not qualify to be treated as captive mines.

“Asa result the State Govt is losing and will continue to lose at least Rs.2,40,000 Crores rupees.”- told Mr Parida 

In case of JODA WEST , the  1st renewal was granted in favour of TISCO for 20 years from 17.01.1963 to 16.01.1983 over an area of 1437.19 Ha .The 2nd renewal of lease was granted for 20 years from 17.01.1983 to 16.01.2003. Tata Steel applied for renewal of Mining lease on 07.12.2001 over an area of 1437.19 Ha in Form J. At page 7 of the application it is mentioned that
“The surplus ore which will be raised incidental to mining will have to be disposed of in the interest of the mineral development and conservation and shall be intended for other integrated steel plants domestic industries / market and also for export through MMTC as and when required”. 

In case of JODA EAST , the 1st renewal was granted in favour of TISCO for 20 years from 1.07.1955 to 30.06.1985 over an area of (2.59 sq miles) 671.093 Ha .The 2nd renewal of lease was granted for 20 years from 01.07.1985 to 30.06.2005. Tata Steel applied for renewal of Mining lease on 27.04.2004 for iron ore over an area of 671.093 Ha in Form-J.

In case of KATAMATI, the required quality and quantity of Iron Ore will be used in the company’s steel plant at Jamsedpur, Proposed sponge iron Plant Tata Metaliks ltd, Kharagpur, other steel plants in Odisha and in the country and also for commercial use .

The 1st renewal was granted in favour of TISCO for 20 years from 17.01.1963 to 16.01.1983 over an area of 409.06 Ha

The 2nd renewal of lease was granted over an area of 403.3238 Ha for 20 years from 17.01.1983 to 16.012003.

Tata Steel applied for 3rd renewal of Mining lease on 5.09.2001 for iron ore over an area of 403.3238 in Form J. At page 6 of the application it is mentioned that

The surplus ore, which will be raised incidental to mining will be processed for beneficiation for mineral conservation and shall be intended for domestic industries and exports market through MMTC as and when required.

Director of Mines, Bhubaneswar forwarded the 3rd renewal application to State Government of Odisha vide letter dated 30/01/2004 for consideration of grant of renewal of mining lease subject to the condition that “the lessee shall supply iron ore to the State based Iron and Steel industries on preferential basis after meeting their own requirement for captive consumption and their after surplus quantity if any may be disposed of for outside steel industries” 

In case of KHANDABANDHA , the  1st renewal lease deed was executed on 10.01.1978 for a period of 20 years w.e.f. 17.01.1963 for 3134.475 Ha .The 2nd renewal lease deed was executed on 27.10.1984 for a period of 20 years w.e.f. 17.01.1983 for 1293.433 Ha.Tata Steel applied for renewal of Mining lease on 29.10.2001 for iron ore over an area of 978 Ha in Form-J. The Director of Mines, Bhubaneswar forwarded the 3rd renewal application to State Government of Odisha vide letter dated 30/01/2004 for consideration of grant of renewal of mining lease subject to the condition that

The lessee shall supply iron ore to the State based Iron and Steel industries on preferential basis after meeting their own requirement for captive consumption and their after surplus quantity if any may be disposed of for outside steel industries. 

In case of BAMABERI , the 1st renewal of mining lease was granted in favour of TISCO for 20 years from 01.04.1960 to 31.03.1980 over an area of 1150.550 Ha .The 2nd renewal of lease was granted for the entire area for 20 years from 01.04.1980 to 31.03.2000.
  
Tata Steel applied for renewal of Mining lease on 5.01.1999 over an area of 464.00 Ha comprising of three discontinuous block like Bamebari block 140.00 Ha, Juribahal Block 91 Ha and Baneikala Bock 233.00 Ha) in Form J.

The Director of Mines, Bhubaneswar forwarded the 3rd renewal application to State Government of Odisha vide letter dated 13/02/2006 for consideration of grant of renewal of mining lease observed that There is no justification for grant of RML over 324.00 Ha comprising the Jaribahal and Banaikala Block which are kept non-working for which Government sustained loss of considerable amount of revenue. Grant of Mining lease over the above two blocks to other prospective applicant will not only check unauthorized extraction of Manganese ore and loss of Government revenue but will generate additional revenue to the State exchequer and employment opportunity for the local people.

The applications recommended for grant of RML over 140.00 Ha in Bamebari Block  is only out of the applied area of 460 Ha in three blocks for a further period of 20 years .

The State Govt vide its letter dated 31.05.2014 passed the express order allowing the 3rd RML of the four mines namely Joda West, Joda East, Katamati and Bamebari.
For seeking an exemption u/s 6(1)(b) of the MMDR Act, State Govt vide its letter dated 30.09.2010 wrote to the Central Govt that, The company is committed to utilize the raised mineral for captive consumption in their plants for value addition and Since Tata Steel has been utilizing the minerals for captive consumption in its plants and is committed to continue with this practice under Rule 24(B) of MCR, 1960 Tata Steel is entitled for the renewal .

While passing the express order allowing 3rd Renewal in a mechanical and arbitrary way for the four mines on 31/05/2014 the State Govt has noted that , The company is committed to utilize the raised mineral for captive consumption in their plants for value addition and Since Tata Steel has been utilizing the minerals for captive consumption in its plants and is committed to continue with this practice under Rule 24(B) of MCR, 1960 Tata Steel is entitled for the renewal .

In pursuance to Odisha MMDR Ordinance 2015 the extension orders were issued in favour of Tata Steel till March, 2030 treating all mining leases for captive purpose. The check list dated 10/03/2015 pertaining to extension of Khandbandh Mines shows that

“1(vi) Captive / non-captive (as per lease deed) – Non-captive”

Captive means the use of entire quantity of mineral extracted from the mining lease in a manufacturing unit owned by the lessee {R12A (6) of the MMDR Act} .Tata Steel in their applications for 3rd renewal has categorically mentioned that besides meeting the requirement of its own industries it will supply the ore for to other domestic industries and will also export the same.

Similarly, the Director of Mines while recommending the application for 3rd renewal has stipulated a condition that the lessee will have to supply the ore to other industries located within the state which makes it clear that the lease was commercial.

However, the during the 3rd renewal the lease was converted to captive use.

From the check-list it is clear that the earlier lease was granted for commercial purpose.

The Lease condition of a mine, without prior approval of the Central Govt, cannot be converted from non-captive to captive use as barred under Rule 27(3) of the Mineral Concession Rule, 1960. A captive clause in the lease Deed can be inserted only with prior approval of the Central Govt. as provided under Rules 27(3) of the MCR 1960. Till and until such approval is taken an express captive clause is inserted in the lease deed such lease cannot be termed as captive lease.

The relevant data has been collected which shows that Tata Steel has sold/exported iron ore from Joda East mine during the year 2001 onwards and to be specific, during the financial year 2003~4 and 2004~05 Tata Steel has exported iron ore. 

It is therefore impermissible to accord 3rd renewal under Rule 24(B) of MCR, 1960.

More so Tata Steel has sold / exported the ore after submitting the Form –J for renewal

The 3rd renewal letter dated 31/05/2014 refers to a resolution notified in the Gazette dated 3.10.2012 which says that
“The area to be renewed shall be limited to the captive requirement of 30 years of the existing capacity of the mineral industry of the lessee. While determining the mineral ore available to the lessee for captive use, the mineral resources of all the leases held by the said lessee in the country will be taken into consideration”.

The  State Govt of Odisha has never undertaken the exercise of assessment of the captive requirement of the existing capacity of the lessees prior to allowing this 3rd renewal.
 
These mines would have been at best extended till 31st March, 2020. Since the State Govt erroneously converted the non-captive mines to captive mines, there is a huge loss to Exchequer due to this extension. Assuming the premium of 100% and an average IBM price as Rs.6000/t, the Government is losing a premium of Rs. 24,000 crores annually (40 MT x Rs. 6,000/t x 100%) and for ten years the loss stands at Rs 2,40,000 crores.

Submitting the above details, Mr Parida , for the interest of the State, demand that , The lease must be cancelled and mines should be put to auction.Tata Steel should be asked to pay a premium of 100% w.e.f. 1/4/2020, because retaining the mines beyond 31/03/2020 is without any authority of law.