Panel for updating mining law to save PSUs

If executed, the proposal could save Coal India alone a contingent liability of nearly Rs 53,331 core, the panel said in its report.

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BHUBANESWAR: A panel with high-level committee of secretaries has recommended amending a section of mining laws that led to a fine of about Rs 19,000 crores levied on Odisha’s iron ore miners to spare a similar burden on state-owned companies and other miners elsewhere.

The committee – chaired by Niti Aayog vice chairman Rajiv Kumar and consisting of the cabinet secretary and secretaries of mines, steel, coal, revenue and finance – has concluded that if the reasoning applied to penalise mines in Odisha was applied to others, it would lead to “huge financial burdens on mining companies, including PSUs and would adversely impact their economic viability”.

If executed, the proposal could save Coal India alone a contingent liability of nearly Rs 53,331 cores, the panel said in its report.

In August 2017, the Supreme Court had ruled that a mining operation conducted in violation of environment and pollution laws would also count as illegal and unlawful mining.

Under Section 21 (5) of the Mines and Minerals (Development and Regulations) Act 1957, states are empowered to recover the entire value of illegally mined mineral or metal irrespective of the royalty, tax and duty paid. Since that ruling, the Naveen Patnaik-led Odisha government has collected more than Rs 15,000 crore in penalties for environment violations from various miners and initiated coercive action against those that haven’t paid.

The committee’s recommendation is also in contradiction to the stand taken by the Narendra Modi government during the course of hearings. In an affidavit dated January 20, 2017, it had made a submission before the Supreme Court that “all forms of mining without lawful authority, including that in breach of the limits imposed by the EC, carried out within the lease area would also invite penalties” under the MMDR Act.

The dilemma now is holding public sector undertakings and mines in other states to the same standards.

The committee, in its report, makes the same argument Odisha’s iron ore mines had made to the top court: that violations in the nature of mining in excess of environmental caps or without forest clearances not be punished by provisions dealing with illegal mining under the MMDR Act.

It said the judgement had led to raising of huge demand on leaseholders in Odisha and Jharkhand. Other state may also impose similar penalties.

The report said that the fact does remain that compliance above judicial pronouncement is likely to create huge financial burden on mining companies including PSUs and will adversely impact their economic viability.


Industry insiders said that in case the Act is amended then miners already penalised should also get the benefit.

B Prabhakaran, owner of Thriveni Earthmovers which is the mining contractor to some of the largest iron mines in the country asked that why should Odisha’s iron ore miners alone have to be fined for exceeding the environment clearances. If such an amendment is under consideration, then Odisha’s iron ore sector should be judged by the same yardstick, at par with other minerals, other states and irrespective of the organization. Captive mines had other resources, large firms could raise funds, it is the small private miner who suffered from this interpretation of the law, and is struggling to comply.

Odisha and Jharkhand have slapped demand notices on Coal India subsidiaries since the landmark ruling in 2017. While Odisha demanded Rs 20,169 crores from Mahanadi Coalfield, since reduced to Rs 10,289 crores, Jharkhand asked for Rs 33,714 crores from Central Coalfields and Bharat Coking Coal.

Jharkhand has also sent claims totalling Rs 3,273 crores to iron ore miners, including around Rs 1400 crores from state-owned Steel Authority of India. Its mines, unlike those in Odisha, have continued to operate with part, or no payment, under orders from the High Court of Jharkhand.

Hearing a petition from Hindalco against a demand of Rs 103 crores on excess mining of bauxite, for example, the HC weighed in on the fact that “the lessee was among the country’s largest aluminium producers and wasn’t being accused of illegal mining”.

Similarly, Coal India’s subsidiaries have received relief from the central mines ministry’s revisional authority (RA). Odisha’s demands from bauxite mines, to, have been stayed by RA.

Aboobacker Siddique P, mines secretary of Jharkhand said that we have written to the RA to vacate the stay and for speedy disposal of the matter. Some iron ore miners have paid 30%, some 15% and are operating under HC orders, asking us to issue transport challans.

Against total demand of Rs 39,399 crores, Jharkhand only received Rs 615 crore until now. Telangana and Goa governments believe the 2 August 2017 order is only applicable to mines in Odisha.

Amendment Sought in MMDR Act

Section 21(5) of the MMDR Act says: Whenever a person raises without any lawful authority any mineral from any land, the state government may recover from such person the mineral so raised or where any such minerals have already been disposed of the price thereof and may also recover from such a person rent, royalty, or tax, as the case may be, for the period during which the land was occupied by such a person without any lawful authority.

The high-level committee has suggested replacing “without any lawful authority” with “in contravention of the provisions of this Act and rules made thereunder”. This would help revise penalties for violation of rules related to environment, pollution and other issues.

Source: Economic Times