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The extension of Tata Steel's Sukinda chromite mine has hit the wall of delay seemingly over a confusion within the state mines department over the status of the lease.
The lease spread over 406 hectares (ha) in Jajpur district was affected following the Supreme Court order in May last year that asked the state government to shut down mines operating on the basis of 'deemed extension' while awaiting their second and subsequent lease renewal after expiry of the term of the first lease extension.
But the enactment of the new Mines and Minerals (Development & Regulation) MMDR Act, 2015 allowed extension of captive leases till 2030 and those of non-captive mines till 2020.
It may be noted that during the grant of the second renewal order for Tata Steel's chromite mine in 1997, the state government had changed the status of the lease from 'captive' to non-captive, allowing merchant sale of chrome ore.
However, after the Supreme Court order, the government in December last year, had issued express order for the chromite mine, considering its status as captive lease.
"There is absolutely no confusion on the status of the lease. The decision on extension of Tata Steel's chromite mine can be known after an inter-departmental committee's meeting to be held shortly. The committee will make its recommendations to the government," said Deepak Mohanty, director of mines.
Tata Steel is currently operating the Sukinda mine at a reduced capacity only to meet their captive requirement while stopping merchant sale of chrome ore to other ferrochrome and steel units in the state.
The validity of the express order that allowed Tata Steel to run the mining operation has expired on May 31. However, the company is yet to sign the lease extension deed with the government within this period, as mandated in the order, due to lack of clarity whether the mine should be considered a captive lease or not.
Meanwhile, the company is carrying out operation on the basis of a direction of the Odisha High Court.
As per the policy resolution of the state government in October 2012, only requirement of existing capacity of mineral industry would be considered for renewal. But in case of Tata Steel, the Gopalpur plant requirement was also considered which is non-existent and against the government's own resolution.
Jindal Stainless Ltd (JSL) is understood to have filed a petition in the revision authority of Union mines ministry that the government's express order for Tata Steel in December 2014 is in violation of its own policy resolution.
Meanwhile, non-extension of chromite mine lease has jeopardised operations of ferrochrome makers in the state. And, the change of Tata Steel's chromite mine status to 'captive' lease could upset ore supply equations for such manufacturers.
The apex industry body, Indian Chamber of Commerce (ICC) in a letter to chief minister Naveen Patnaik said, the state government was losing Rs 735 crore revenue every year due to lower chrome ore production from three mines of Tata Steel, Misrilal Mines and B C Mohanty.
Tata Steel is presently mining 0.25 million tonne per annum (mtpa) of chrome in contrast to 1.84 million tonne that it produced in 2011-12.
On the other hand, mines owned by Misrilal and B C Mohanty are under shutdown since the Supreme Court order in May last year. Together, these two mines produced 0.21 million tonne in 2011-12.
Owing to drop in production and stoppage in supplies of chrome ore and chrome ore concentrates, the ferrochrome makers are grappling with a shortage of 1.75 million tonne a year.
Due to non-availability of chrome ore at economically viable prices, the ferrochrome manufacturers are suffering huge losses. Major ferrochrome units like Jindal Stainless Ltd (JSL), Visa Steel and Rohit Ferrotech incurred net losses of Rs 1,390 crore, Rs 148 crore and Rs 229 crore respectively in 2014-15.
ICC has urged the state government to take appropriate steps to extend validity of the three chromite mines till 2020.
