Orissa govt policy to affect Tata, Jindal plans

Tata Steel and Jindal Steel and Power (JSPL), proposing to set up mega steel ventures in Orissa, are unlikely to get fresh captive iron ore mines for their respective projects, thanks to the new policy guidelines of the state government.

The allotment policy for captive mines in the state assures raw material linkage to a project for 25 years, based on its installed capacity.

But a clause in the same policy says, "If a company has an existing mining area or controlling interest or long-term arrangement for supply of iron ore in any company/concern having mining area for the relevant mineral in the state, its requirement shall be reassessed by the state government after taking into consideration the quantity of mineral that can be met from these sources".

This clause has come in the way of Tata Steel and JSPL getting fresh captive mines as both the companies either own or have a controlling interest/long term arrangement for supply of iron ore with a local mine owner.

Tatas own and operate at least five mines in the Keonjhar district of Orissa, which have a combined estimated reserve of 630 million tonne.

As against this, the Tatas' raw material requirement for its proposed 6 million tonne steel plant at Duburi for 25 years is estimated at 240 million tonnes.

The Tatas in their project proposal submitted to the state government have asked for allotment of captive leases with 540 milion tonne iron ore reserve.

But their existing leasehold of 630 million tonne of reserve being more than double the 25 years raw material requirement of 240 million tonnes, the policy guideline of the state government does not allow for any further captive mines allotment to the company for the Duburi project.

Similarly, the JSPL proposes to set up a two million tonne steel plant at Deojhar in Keonjhar district. Its iron ore requirement for 25 years is estimated at about 80 million tonnes.

However, the state government records show that JSPL has controlling interest or long term arrangement with Thakurani B mines owned by SL Sarda and ML Sarda in the Keonjhar district.

The previous chief secretary of Orissa, PK Mohanty, who retired only a couple of months back, in his file notings has mentioned that "It almost appears, the entire sized ore raised during 2001-02, 2002-03 and 2003-04 by the lessees and apparently crushed by Jindal Steel and Power has been sold to the Raigarh plant owned by the latter".

Thakurani B has huge reserve of about 270 million tonne of iron ore. Jindal Steel and Power has separately applied for mining lease of Thakurani A having an estimated reserve of 270 million tonne of iron ore for setting up a steel plant at Deojhar.

"While a formal decision on the request for the mining lease could be taken separately, it will be worthwhile to suggest that the application by Jindal Steel and Power for mining lease of Thakurani A should not be considered as it is obvious that they have already access to the iron ore of Thakurani B through SL Sarda and ML Sarda as otherwise other potential investors in steel plant sector in the state will be debarred from having access to the huge reserve of Thakurani area, which will not be in the best interest of the state", the former chief secretary noted.