In 2007, India’s largest iron ore producer, NMDC, dragged Tata Steel and Essar Steel to court over allotment of prospecting licences in the rich Bailadila deposits in Chhattisgarh. Three years later, with a memorandum of understanding for an alliance in minerals and steel already inked with Tata Steel, parleys are being held for a possible settlement of the dispute.
Consider the arrangement: NMDC will partner Tata Steel in its Chhattisgarh steel project and the disputed Bailadila mine will be made captive to the project and the joint venture.
That’s the proposal in the works. “We have asked for a clear letter from Tata Steel on the issue and are awaiting an answer,” said a top NMDC official. With the letter in hand, NMDC would put it up to the Union steel ministry for approval. Once ratified, the court case could well be withdrawn.
Bailadila certainly calls for rapprochement. Easily one of the best iron ore deposits in the country, Bailadila has 14 deposits with reserves of around 1.2 billion tonnes having 66 per cent iron ore.
While Tata Steel got Bailadila 1, Essar bagged deposit 3 as NMDC’s lease expired in 2007. NMDC was the first applicant for a prospecting licence for deposit 1 and a lease holder for deposit 3. The indicative reserves for deposit 1 are around 138 million tonnes and 72-75 million tonnes for deposit 3.
But curtains may soon fall on the courtroom drama. The possibility of a settlement came in January this year when NMDC and Tata Steel signed an MoU for exploring an alliance in minerals and steel.
The scope of the MoU was unbounded with the possibilities ranging from acquisition and development of mines to setting up integrated steel plants. Chhattisgarh was not mentioned, neither a possible settlement. Of course, it wasn’t excluded either.
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Six months on, the talks are slowly moving towards resolving the dispute. A partnership with Tata Steel might make its project more acceptable to the people of Chhattisgarh, the project having faced issues with land, pointed out industry sources. After all, NMDC has been operating in Chhattisgarh—the Naxal heartland—since the 1960s.
The public sector miner has 788 acres in possession and the first bricks for its three million steel plant would be laid by the end of the year. In contrast, it’s been six years since Tata Steel signed its MoU with the Chhattisgarh government.
It’s not that NMDC has not had to bear the brunt of Naxalism. The company’s bottom line was impacted significantly when Naxalites blasted the Essar pipeline.
The 267-km Essar pipeline which carries iron ore slurry from a beneficiation plant at Bailadila to its pellet plant at Vishakhapatnam (Andhra Pradesh) was blown up by Naxalites in June 2009 near Chitragonda (Orissa) close to the Chhattisgarh border. That took away about Rs 925 crore from NMDC’s net profit in 2009-10.
Even if there is semblance of a resolution to the Tata Steel dispute, there is no case for withdrawing the case against Essar Steel yet.