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The Odisha government is readying to withdraw the notification for standalone mining companies to sell at least half their extracted ore to industries in the state.
The steel & mines department notified the resolution on December 5 last year. Now, the law department says the move might not pass legal scrutiny.
"The law department has not approved the resolution making it compulsory for mine lessees without end-use plants to sell at least 50 per cent of their output to local industries. We have now sought the views of the state advocate general, which we are set to receive soon. But it is a forgone conclusion that this resolution would be rolled back, since the law department has opposed it”, said a source at the steel & mines department.
Rajesh Verma, secretary (steel & mines) could not be reached for comment.
The central mines ministry has written thrice to the state, seeking quashing of three contentious resolutions, including this one, arguing these do not conform to mining laws.
"The decision...cannot be invoked by application of Rule 27 (1) (m) of the Mineral Concession Rules, 1960, under the pretext of right of pre-emption. The right of pre-emption can be enjoyed only by the state government and such a right cannot be transferred as in the instant case to mineral-based industries in the state,” the Union mines ministry had stated on the December 5 resolution.
Terming the restriction a breach of the Constitution, the ministry said such a restriction could only be introduced through appropriate legislation or amendment in the existing one. Mining companies had also objected, arguing the demand for iron ore in the state was not adequate to absorb even half of what was produced.
“If the state government has decided to withdraw the resolution, it is in the best interest of mineral development. Odisha produces 60-65 million tonnes of iron ore annually. Even if all steel plants and other iron ore consuming industries in the state operate at 100 per cent capacity, the requirement will still be in the range of 18-20 mt. Available government data shows 48 mt of iron ore fines (as on May-end) have piled up at different mines. Moreover, the restriction imposed by the state government is not legally tenable,” said a senior official of a large standalone mining company.
Provisional figures of the state directorate of mining show iron ore production in 2012-13 was 62.4 mt. The highest ever level was 79.7 mt in 2009-10; it has been on a decline since then.
