Kolkata-based steel maker Adhunik Metaliks Ltd has filed a petition in the Supreme Court against the Centre challenging the allotment of a coal block in Orissa.
The special leave petition, scheduled for a 31 July hearing, challenges the government’s decision to award mining and mineral extraction rights to Bhushan Steel Ltd in the Patrapara area of central Orissa. Those rights were originally allotted to Adhunik Metaliks.
In June 2003, the coal ministry had cleared Adhunik’s request for 42 million tonnes (mt) to be mined from Patrapara, which has a a total reserve of 210mt. Several screening committee meetings reviewed the matter until the end of October 2005, when it was mutually decided to distribute the rest of 178mt among seven other companies for mining.
It was also agreed that a joint venture company would be set up, with one main investor holding the 30-year lease and supplying the others at a price fixed by the government.
Apart from Adhunik, the companies allotted mining shares were: Bhushan Steel Ltd, Visa Steel Ltd, SMC Power Generation Ltd, Orissa Sponge Iron & Steel Ltd, Deepak Steel & Power Ltd, Sri Metaliks Ltd and Adhunik Corp. Ltd, an Adhunik group company. Bhushan Steel, which is building a 3mt steel plant in Orissa has said it requires 326mt of coal.
To supply sufficient amounts of coal to all players, the government enlarged the Patrapara block by clubbing together portions of neighbouring Aunli and Machakada coal blocks, bringing the total reserve to 640mt.
Objections arose in January last year when the coal ministry awarded Bhushan Steel the Patrapara lease and named it the mining group leader. Adhunik’s coal share was also reduced from 42mt to 31mt.
Adhunik has challenged two clauses of the coal allotment policy that don’t allow handing over blocks for mining without carrying out a survey for “sub-blocking”, or cutting off blocks. It has also petitioned that a single company cannot push for a requirement more than the original reserve of 210mt. As a mining right holder allotted almost half of the block, Bhushan Steel was asked by the government to pay a bank guarantee of Rs138 crore and pay Rs25 crore for a survey report to the Central Mine Planning and Design Institute.
The company has paid Rs6.28 crore for the report already. Both Bhushan and Adhunik declined to comment as the matter is in litigation.
SMC Power, which is building a steel plant in Orissa’s Simbalpur district, had earlier filed a separate case in the Delhi high court against the government’s decision, but the plea was rejected. In March this year, Adhunik’s previous petition in the Orissa state court was dismissed on the ground of Res Judicata, when two simultaneous petitions are filed for the same action.
The government, which retains exclusive rights over coal distribution, introduced the concept of joint mining rights in 2005 to meet an acute shortage among steel and sponge iron manufacturers, who are riding high on robust demand but face a resource crunch to boost production.
The shortage of raw materials—such as iron ore, coal and chrome—is snowballing into litigious controversies which analysts fear will slow infrastructure development.
India has 295 billion tonnes (bt) of coal reserve, of which only about 60% has been explored. Some 161 coal blocks have already been allocated for captive mining, with 27 of them pending approval.
Another 81 blocks with a reserve of 20bt were identified earlier this year for allotment. Of this, about 38 blocks were opened to mining in January this year, for which the ministry received some 14,000 applications, according to a coal ministry official who did not want to be named.