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Jharkhand extends SAIL's leases for 5 years


All state-owned mines, captive and non-captive, whose leases have expired or were due to expire before March 31, 2010, would stand extended until March 2020.
BHUBANESWAR: The Jharkhand governmenthas extended Steel Authority of India's (SAIL) leases for mining in the state for five years, based on a central government order specific to state-run companies and corporations.

The February 6 order had created some confusion within the industry since the amendment to the mining law, approved by the Rajya Sabha on Friday but was previously implemented through an ordinance, allowed mines with captive leases waiting second and subsequent renewals to operate until 2030 — and for five more years, if they were merchant mines. Work at all such mines had come to a halt last year after the Supreme Court ordered they could not continue without a renewed lease.

"To tide over the uncertainty", the order said, all state-owned mines, captive and non-captive, whose leases have expired or were due to expire before March 31, 2010, would stand extended until March 2020. On the face of it, the order seemed to put SAIL at a disadvantage to peers: private players could run their mines for 10 years more than SAIL, until 2030.

SAIL chairman CS Verma didn't respond to queries on the February 6 order. Aspokesperson said all its mines were operational, except for Barsua which was awaiting clearance.

The nation's largest steelmaker by local capacity is undertaking a Rs 61,870-crore modernisation and expansion programme to double hot metal capacity to 23.1 mt a year by 2016-17. Prime Minister Narendra Modi is expected to visit its Rourkela Steel Plant (RSP) on April 1 to attend an event marked to celebrate a major milestone.

Though self-sufficient in iron ore, SAIL is still behind in its plans to enhance captive raw material production, due to delays in clearances and grants.

The mining ministry clarified that the order was a mere "transition provision" since the mining ordinance, had said separate rules and guidelines would be issued for government companies. India is shifting to a system where all future mining grants, starting with minerals essential for making steel, aluminium and cement, will be auctioned. "It is only a matter of time before specific rules were drafted and state-owned companies would not be prejudiced against in any way," said an official.

SAIL's leases in Odisha have been renewed, but it had failed to move the former Jharkhand government to renew all six leases of Chiriya iron ore deposit in its favour.

State governments eyeing private investors have been unmoved by the PSU's pitches. SAIL has set aside more than Rs 10,000 crore to enhance mines and improve raw material security, but taken years to appoint mining contractors to develop Rowghat and Chiriya, two mines critical to its future needs. Even as imported coking coal, accounting for 82% of its requirements, eroded margins, Jharkhand delayed land transfer and grant of the Sitanala coal deposit. SAIL has recently reapplied for the block, which was one of more than 200 blocks on which mining leases were revoked by the Supreme Court last year.

Meanwhile private players say the state's government is delaying lease extensions for them. Work at five of Hindalco's bauxite mines in Jharkhand, stopped last September is to resume. The company hopes to get a supplementary lease dead, extending their tenure till 2030.