CEC dashes Odisha's hopes of hefty penalty from excess mining

State demand of Rs 61,705 crore from errant miners was contested by scores of lessees in the Revision Authority

The report of the Supreme Court appointed central empowered committee (CEC) has dashed Odisha’s hopes of recovering a hefty penalty from miners embroiled in excess mining of iron ore and manganese ore during 2001-10. If the recommendations of the panel is accepted by the apex court, the state could only receive less than 10 per cent of its penalty claims.  

The state government had raised a demand notice, demanding an exorbitant sum of Rs 61,705.70 crore from the errant miners, a move which was contested by scores of lessees in the Revision Authority.

The CEC that submitted its complete report on illegal mining in Odisha to the apex court on Friday, has recommended recovery of at least 30 per cent of notional value or benchmark rate of iron ore extracted without statutory clearances.

“The total notional value of the minerals produced without or in excess of environmental clearance, at the weighted average price of minerals published by the IBM adds up to Rs 17,091 crore for iron ore and Rs 484.92 crore for manganese ore”, the panel said in its report. Should the CEC’s recommendations be accepted by the top court, the Odisha government could end up fetching only around Rs 5,200 crore from the miners, not even a tenth of the staggering figure of Rs 61,705.70 crore.

The CEC’s calculation is based on benchmark price issued by the Indian Bureau of Mines (IBM) instead of the state government’s methodology of determining penalty amount on current market prices for ore extracted even 10 years back.

A senior state official said, “The CEC report will enable the state government to get some revenue from excess mining which was otherwise difficult and cumbersome to extract due to litigations.”

Reacting to the CEC report, state steel & mines minister Prafulla Mallick said, “We are awaiting the Supreme Court's observations on the CEC report. The state government will fully comply with the apex court's directions.”

But miners who were anxious about the outcome of mining post the CEC report are hugely relieved. The report has many positives for the mining industry — it has lessened the steep penalty burden, prescribed no ban on mining and has steered free of any recommendation for a CBI probe into illegal mining.

“Overall, this is a very good report for the mining sector. Unlike Goa and Karnataka, the CEC has not recommended any ban on mining in Odisha. It has only suggested penalty”, said a top official of a standalone miner.

Giriraj Daga, senior research analyst with broking house Nirmal Bang, said, “The CEC report on Odisha mining clearly shows that the panel is in favour of operations of mines. The committee has thought of the economy instead of recommending ban on mines. This is a good initiative.”