Verdict Times

Supreme Court allows more time for collecting penalties from miners

Supreme Court allows more time for collecting penalties from miners

The Supreme Court today urged the Odisha government to take steps to realise compensations from the defaulting miners. In a follow-up hearing in the case related to rampant illegal mining in the state, the apex court said miners who skip payments, their assets could be confiscated.

Its not known how the Supreme Court would allow to recover the dues pending on errant miners. But, a mining industry source said, the state government can serve notice on the miners and wait till a maximum of 60 days as per some existing provisions in Mineral Concession Rules.

As per the Supreme Court of August 2 last year, the Odisha government had raised a demand notice of Rs 17576.17 crore on 131 iron and manganese ore miners for EC (environment clearance) violations. It has managed to collect Rs 10,189 crore, leaving around Rs 7000 crore of compensation unrealised.

With one large merchant miner- Essel Mining & Industries making its payment in full after the stipulated December 31 deadline and a few other miners expected to follow suit, iron ore production in Odisha is expected to pick up steam from the next fiscal.

Apart from Essel Mining, state owned Industrial Development Corporation Ltd (Idcol) has also paid its share of compensation of Rs 105 crore after the court ordered deadline. The apex court has condoned the delay in payment by Idcol and allowed it to resume mining operations after paying 12 per cent interest.


For Essel Mining, the apex court has fixed February 9 as the next date of hearing. The resumption of its mines hinges upon pending statutory approvals.

“Both Essel Mining & Idcol have paid compensation after the Supreme Court mandated December 31 deadline. Now, with the court allowing the Odisha government to continue collection of compensation, more miners would strive hard to comply to save their leases and also assets from being confiscated. As per some provisions in the Mineral Concession Rules, the state government can allow 60 more days to the miners to pay their arrears though the court has not spelt any timeline”, said a mining industry source.

After the December 31 deadline lapsed, the Odisha government stopped operations of seven working iron and manganese ore mines owned by Serajuddin & Company, Korp Resources, Mesco Steel, Idcol and National Enterprises. The shutdown of these mines knocked off about 20 million tonnes in annual iron ore mining capacity. The deficit in January-March quarter is estimated to be around three million tonnes.

The closure of working iron ore mines triggered unprecedented hikes in prices by both Odisha miners and National Mineral Development Corporation (NMDC). Iron ore lumps prices climbed up by Rs 400-500 per tonne. The spurt in iron ore prices is expected to raise cost of steel production by Rs 800-1000 per tonne.

A leading iron ore miner in Odisha expressed optimism that price hike would not spill over to the next fiscal. “The Supreme Court’s lenient view on allowing compensation payment after the deadline should spur the miners to clear dues. Once production resumes from the closed mines, there would be ample supplies and this will arrest any further hike in prices. Besides, there are some non-working mines who have paid penalties and they are expected to restart operations after other statutory violations cases against them are resolved.”

Restarting operations by some key non-working iron ore mines, especially the ones held by Essel Mining would help add nearly 30 million tonnes in iron ore production each year.

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