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The Supreme Court has set aside a plea filed by Federation of Indian Mineral Industries (FIMI) seeking to declare a Odisha government notification of compulsory sale of iron ore in local market as illegal and said, the state government has the right to reserve of half of the output for user industries within the state if it desires so, according to government and trade officials.
"The Supreme Court dismissed all five Special Leave Petitions (SLPs) filed by the FIMI on the Odisha government's 50:50 iron ore reservation resolution. The apex court held that the arguments in these petitions were legally untenable," said P L Kandoi, president, All Odisha Steel Federation (AOSF), a body of steel industries which backed the state government decision.
A state government official also confirmed the SC verdict in the matter.
Fimi had argued that pre-emption of iron ore by the state to an extent of 50 per cent was unnecessary as it exceeded the combined requirement of all local steel industries. It also said, the concerned parties were not lifting the ore and the reservation of iron ore needed to be scaled down. As per the order, local miners had kept aside around 16 million tonne ore for local buyer in 2014-15, whereas the actual need was less than 10 million tonne.
But AOSF in its counter argument, prayed to the Supreme Court that the pre-emption should continue and if the ore is not lifted within 30 days, it would go back to the lessee, Kandoi stated.
In April last year, the High Court had upheld the state government's decision saying, the government has the right of pre-emption on minerals as mentioned in the section 27 of Mineral Concession Rules (MCR) and hence the notification was legally valid and had asked the government to come up with a mechanism for sale of the ore to the local industries. According to section 27 (1) clause (m) of MCR, "the state government at all times have the right of pre-emption of the minerals won from the land in respect of which lease has been granted, provided that fair market price prevailing at the time of pre-emption shall be paid to the lessees for all such minerals." After HC order, the state government has formed a policy to provide raw materials to local steel units based on their plant capacity, out of the ore excavated by merchant miners with a provision to revise the supply amount every quarter.
On December 5, 2012, the Odisha steel and mines department had issued notification directing all merchant miners to reserve half of their monthly iron ore output for sale in domestic market citing mineral development and other rules contained in the MCR as well as raw material need for local steel companies as the cause for such action.
Many miners had moved high court challenging the legal validity of the notification. Even the Centre had reprimanded the state government against the decision terming the restriction on mineral sales as breach of the Constitution.
