iron ore scam

The Supreme Court’s intervention in iron ore scam might increase apprehensions of Odisha Government.

The SC directive is to submit Shah Commission report. It has brought a new twist to multi-million iron ore mining scam in Odisha. While, experts say that Shah’s report has the potential to cripple domestic steel industry, the court’s intervention will only bring more apprehensions to steel & mining industry and government. The report has indicted miners and government, are equally responsible for ‘mega scam’ and the Supreme Court’s intervention could open a way for CBI enquiry.

iron ore scam

On 13 Jan, 2014 the Supreme Court directed Indian Government to submit Shah Commission report on illegal mining in Odisha by 27Jan 14. The apex court had also directed the government to send a copy of probe report to the Central Empowered Committee (CEC). The Supreme Court’s green bench had passed order after a plea by the Goa Foundation. The order stated that the commission should be granted a year extension to investigate mineral bearing states like Jharkhand & Chhattisgarh. Advocate Prasant Bhushan appearing on behalf of petitioner had alleged that contents of report, published in newspapers, are shocking and the apex court should examine them.

In Oct 13, the Justice MB Shah commission has submitted its final report on mining scam in Odisha. As per Commission of Enquiries Act, report should be submitted in the parliament within 6 months of submission by Shah Commission. In the first week of January, report has been submitted before union cabinet and it was subsequently referred to committee of secretaries for scrutiny and preparing an action taken report. It is expected that report might be presented in the parliament on upcoming session starting from 5 Feb, 2014. However, some portions of report are already leaked in media which has lifted speculation level high.

According to reports, the Shah Commission has indicted State & Central government for multi-million mining scam.  The probe panel has asked the Odisha Government to collect INR INR 600,000 million from miners that have raised minerals more than permitted level. It spent that amount for overall development of two mineral bearing districts Keonjhar & Sundargarh.

It is interesting to notice that there is discrepancy between calculations by State government and the Shah Commission on amount of revenue losses owing to excess mining.

Two years back the Odisha Government had estimated that  revenue loss on account of excess mining by total 600 mines (including Iron ore, Manganese, Chromite, Bauxite, Lime ) in  state would be  INR 830,000 million. In the month of November that year, state government sent demand notices for recovery of amount to all miners, including 103 Iron ore mining lease holders. The Iron ore lessees had been asked to pay about INR 679,000 million. Later, miners went to revision authority challenging order. Meanwhile, the Shah Commission in its report has calculated loss amount to about INR 592,030 million.

On the other hand, miners who went to revision authority have their own argument against imposition of penalty. “We have given all royalty & taxes right from mining to transportation & export. The government never questioned legitimacy of mining while collecting tax revenue, how can it be called illegal now?” they argued.

The probe panel also found many violations of environment and forest laws, rules and notifications. Out of 192 mining leases of Iron & Manganese ores in the state, 130 lessees were producing without lawful authority violating of Environment Impact Assessment (EIA) notifications 1994 & 2006. Moreover, 94 mines were found to be operating without Environment Clearance (EC), while 96 obtained delayed ECs. Commission reported, “Overall, 109 mining, leases are/were working under deemed extension and production is still violating EIA, 1994 and 2006.” According to  Commission, Iron ore worth over INR 454,530 million and Manganese ore worth over INR 30,890 million has been extracted ‘illegally’ and ‘without lawful authority’ by  miners in Odisha alone, violating of EC conditions.

The commission has also found Rule 37 violation by some of the leading miners, who have illegally transferred mining leases to other companies or have been raising minerals through raising contractors. On the other hand, the commission has recommended for auctioning of mining leases and annual capping of mineral production in the state. However, on this issue, legal experts say that it is not tenable as there is no such provision under MMDR act 1957.

Overall, experts tracking Odisha Mineral Sector say that, the Shah Commission report and possible CBI enquiry will have a larger impact on Odisha Mining industry and subsequently on domestic steel industry. These developments could trigger temporary closure of many mines, which will impact raw material supply to domestic steel industry and overall Odisha economy.

On the other hand, Odisha government does not see any impact of the report in mining industry. A senior official from Odisha Government says, “The state government has already shut down most of 192 Iron & Manganese ore mines since 2009 on non-availability of forest clearance. Less than 60 Iron ore mines are currently under operation since then. Meanwhile, the government of Odisha has already enforced annual cap in mineral production to 57 MnT pa and relaxed it recently, to exclude captive users. This will bring extra 15 MnT of Iron ore to domestic market. So there will not be any raw material scarcity in the market.”