Demand from the local steel industry is not sufficient, as their production is higher than the demand.
The Odisha government is planning to take back its notification which says that the individual mining companies have to sell at least half the iron ore they extract from the mines to the industries which are within the state. The department of Steel & Mines had notified the resolution on 5th December 2012. According to the law department, this resolution might not pass the legal examinations.
A source from the Steel & Mines department said, “The law department has not approved the resolution making it compulsory for mine leases without end-use plants to sell at least 50% of their output to local industries. We have now sought the views of the state advocate general, which we are set to receive soon. But it is a foregone conclusion that this resolution would be rolled back, since the law department has opposed it.”
The Central Mines Ministry in argument against the resolutions has written thrice to the state for suppression of these three controversial resolutions as they do not confirm the mining laws.
In accordance to the December 5 resolution, the Union Mines Ministry said, “The decision cannot be invoked by application of Rule 27 (1) (m) of the Mineral Concession Rules, 1960, under the pretext of right of pre-emption. The right of pre-emption can be enjoyed only by the state government and such a right cannot be transferred as in the instant case to mineral-based industries in the state.”
The ministry also said that such restrictions can be introduced only through proper law making procedures. There were objections from the miners too, who argued saying that the demand for the iron ore from the state was not sufficient as it was not even reaching half of what was being produced.
A senior official from one of the individual mines of the state said, “If the state government has decided to withdraw the resolution, it is in the best interest of mineral development. Odisha produces 60-65 million tonnes of iron ore annually. Even if all steel plants and other iron ore consuming industries in the state operate at 100 per cent capacity, the requirement will still be in the range of 18-20 MnT. Available government data shows 48 MnT of iron ore fines (as on May-end) have piled up at different mines. Moreover, the restriction imposed by the state government is not legally reasonable.”
Iron ore production by the mines of the state according to the provisional figures was 62.4 MnT in 2012-13.