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This story has been modified. Please see the correction at the end.
In a major blow to Tata Steel, the Orissa High Court ordered the local government to restrain from allocating Sukinda chromite deposits to the private sector steel behemoth till June 19, the scheduled date of next hearing of the case. The court issued a notice to Tata Steel.
While hearing the case, the two-judge bench comprising justice B K Nayak and justice A K Rath ordered the petitioner Indian Metals and Ferro Alloys (IMFA) to avail one extra copy of the writ petition to the state government who shall take instruction in this matter.
The court order assumes significance as the mine with an overall chrome ore reserves in excess of 85 million tonnes sought third renewal of the said mine with its full access of mineral exploration. The proposal was, however, protested by actual users of chrome ore including IMFA which filed a writ petition in the Orissa High Court. IMFA argued that Tata Steel’s requirement of chrome ore is much lower than the quantity allocated to it. Hence, a portion of mineral reserves should be allocated to actual users including IMFA, Jindal Strips, Ispat Alloys and Farro Alloys Corporation (Facor).
“Till June 19, no final decision shall be taken by the state government with regard to grant / renewal of the mining lease in respect of Sukinda chromite mines in the district of Jajpur as indicated in the application of mining lease of IMFA,” said the court order.
Spread over 406 hectares including a contentious 106 acres of forestland, the chromite mines in Sukinda possesses one of the largest chrome ore reserves in Odisha, the state holding 98 per cent of India’s stainless steel raw material. The second renewal lease validity for 20 years expired on January 11, 2013, which was extended for three months last year. Later, the company was granted temporary working permit by the Ministry of Environment and Forest (MoEF) for one year, which expired on April 12, 2014. “We have not received any formal communication from the state government so far. We have applied for the renewal which we believe is in the various stages of clearance,” said a Tata Steel spokesperson.
Subhrakant Panda, managing director of IMFA, was not available for comment.
Odisha government sources said they are awaiting comments from the Indian Bureau of Mines (IBM). Chrome ore is used in making ferro chrome which, in turn, is used in making stainless steel.
A senior official of a large ferro alloys producer said, “Tata Steel’s requirement of chrome ore for captive consumption will be far less than the 85 million tonnes reserves as per their mining plan of 2013. It is truly in the interest of mineral development that they (Tata Steel) do not get the entire 406 hectares. As a first step, State Government should assess afresh the requirement of all large producers in line with the notification dated October 3, 2012 giving primacy to captive consumption.” Tata Steel has applied for third renewal of the mining leases, but other ferro alloy players in the region are demanding a part of mineral deposits be given to them as out of the total reserves of around 85 million tonnes as per the approved mining plan of 2013, Tata Steel’s requirement stands only at 16 million tonnes as assessed by the Sharma Committee report which was the basis of distribution of the entire lease earlier held by Tatas. The Supreme Court by a judgment in 1999 distributed the entire area of 1261 ha held by Tatas on the recommendation of the Sharma committee report.
Industry players fear that allocation of full mines to Tata Steel will raise chrome ore prices significantly which may affect profitability of end users. High grade chrome ore prices shot up by 22 per cent in May as reported by Orissa Mining Corporation (OMC) in its auction early this month.
About 98 per cent of India’s chrome deposits are in Odisha and OMC, owned by the state government, is a major merchant seller, producing a third of the output.
ALSO READ: Tata Steel halts Sukinda mine operation
Clarification
The senior official of the large ferro alloys producer was quoted in the story as: "It is truly in the interest of mineral development that they (Tata Steel) get the entire 406 hectares" while he had said, "It is truly in the interest of mineral development that they (Tata Steel) do not get the entire 406 hectares." This has been corrected and we regret any inconvenience.
