Iron ore rivalry now headed to court

NMDC pitted against Tatas, Essar on Bailadila deposits.

The fight over iron ore deposits is finally going to reach the law courts. National Mineral Development Corporation (NMDC), India's largest iron ore producer and exporter, is set to move court over the allotment of prospecting licences of the rich Bailadila deposits in Chhattisgarh to Tata Steel and Essar Steel.

The committee on disputes (CoD), which aims to reduce litigation between two arms of the government, has given its nod to NMDC for the legal action. With this, the public sector undertaking is now in a position to take the Union ministry of mines and the Chhattisgarh government to court, according to sources familiar with the development.

The ministry of mines had earlier this year allotted prospecting licences to Tata Steel and Essar for Bailadila deposits 1 and 3, respectively, on recommendations from the Chhattisgarh government. The licence would allow the companies to study the deposits. The prospecting licences can subsequently be converted into development licences.

NMDC, sources said, was the first applicant for a prospecting licence for deposit 1 and a lease holder for deposit 3. Therefore, it should have been allowed to prospect for iron ore on these deposits. The indicative reserves for deposit 1 are around 138 million tonnes and 72-75 million tonnes for deposit 3.

A Tata Steel spokesperson declined to comment, though Essar officials admitted the company had bagged the prospecting licence for deposit 3.

According to the sources, deposit 1 was promised to Tata Steel on the grounds that it would add value to the ore within the state and deposit 3 was recommended for Essar under the lease-lapse category.

In 2005, Tata Steel had signed a memorandum of understanding (MoU) with the Chhattisgarh government for setting up a five-million-tonne integrated steel plant in the Bastar region. Essar too had signed an MoU for a 3.2-million-tonne integrated steel project in the mineral-rich state.

NMDC is currently producing about 15.25 million tonnes of iron ore out of the total production of 20.74 million tonnes from the Bailadila sector, which has 14 deposits.

The ore from Bailadila deposits is an important raw material for three major gas-based sponge iron and steel producers like Essar Steel, Ispat Industries and Vikram Ispat. Also, the entire requirement of the Vishakhapatnam Steel Plant is being met from Bailadila.