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Mega investors seek friendly environment, not false allegations: Industry expert



Refuting the allegation made by a Bharatiya Janata Party (BJP) MP on degrading of iron ore value against key investors such as JSW without any evidence, an industry expert said that “it’s is an attempt to soil the reputation of an internationally credible company for vested interests.”

Recently Bhubaneswar MP and senior BJP leader Aparajita Sarangi made an allegation that there is a value degradation of iron ore at JSW’s Jajang and Ganua mines, but in reality the allegation is far from truth and reality is that the steel major has been facing a huge loss from these two mines.

The unviability of mismatch between unrealistic MDPA targets and reserve scarcity has made the company rethink the ownership of mines. Earlier, it had already offered to surrender Jajang and Ganua mines to the Odisha Government.

The mega investors such as JSW, instrumental in generating high revenue for state exchequer, deserve an investor friendly environment in the state. JSW paid the highest mining revenue that is Rs 12,210 crore in way of premium in FY ’22 (upto March 31, 2022).  It was 52.5 percent of the entire state mining revenue from auctioned mines. However, they gave challenges in terms of navigating through unnecessary controversies.

Sources said that the company submitted that the reasons for low-grade ore production are: The Geological Report (GR), prepared and submitted by ex-lessee to the State Government is based mostly on G2 level of exploration and hence, there will be some variation between the actual resources and the GR.

The reserve of Jajang mine is on the verge of depletion and hence, the grade is degrading year-on-year. The total estimated remaining reserves (as on 31.03.2022) is 46.82 million tonnes (MT). Considering an annual ROM production limit of 12.8 MT, the life of mine (LOM) is anticipated to be about 3.5 years. To achieve the targeted ROM production, mining has to be carried out with the help of heavy mine machineries from the currently available mine faces/ benches. Hence, dilution of the ore is inevitable.

Since the Jajang mine is in operation for more than six decades, the high-grade ore has almost been exploited by the ex-lessee. Now only low-grade ore is left out and is associated with BHJ/BHQ. Dilution is quite possible during the blasting.

Besides, undiverted forest area is having about 20 MT of medium to high grade ore which cannot be exploited due to absence of Forest clearances. JSW has applied for forest clearance & is waiting for final approval for it.

Report suggests that the company had carried out a detailed study of optimal utilization of resources of Jajang mines by IIT, Kharagpur. The main highlights of the recommendation are: “With the current annual production limit of 12.8 MTPA, the life of mining {LOM} is anticipated to be about 4 years. Thus, reduction in production limit may be considered for full exploitation of the reserves by introducing latest/advanced process/techniques for mining and beneficiation”. ”For utilization of resources Judicious blending should be adhered to the provision of Rule 12A(2) of MC 2016 and Rule 13(3) of MCDR and MDPA and National Mineral Policy”.Utilization and exploitation of the reserves especially 9.47 MT of low grade ore (unsuitable for direct use) and for maximization of the revenue generation the current production limit of 12.8 MTPA may be reduced.

However, the company is not able to set up the beneficiation plant due to lack of statutory clearances and restrictions of land use plan. Similarly, mining activities can’t be carried out in a selective manner as JSW has to exploit the entire available reserves within a stipulated period.

 JSW reiterated that there is no chance of any kind of pilferage or manipulation as alleged.

 The entire process has been digitized and governed online. The dispatch from Mines up to destination is linked and monitored in the i3MS portal (Govt. of Odisha).

The entire process of mining including production and dispatch is conducted under the direct supervision of the State Government in a transparent manner. To streamline the process, the State Govt has framed the OMPTS Rule which stipulates a robust mechanism to ensure that the grade of the ore dispatched from the leasehold area is ascertained with accuracy. Rule 10 of the said OMPTS Rule prescribes the procedure sequentially as to how to – carry out “stacking – apply for permission – visit of the Local Mining Officer

There is a strict vigilance of Mines by the government officials in different tiers.

The Junior Mining Officers (JMO) conducts daily visit.The Mining Officers, Deputy Director of Mines conduct periodical and surprise visit and inspection of Mines, once in a week or so.There is a District Level Task Force (DLTF) comprise of the experts from respective fields (Mines, Forest, Environment etc.) conducts inspection of mines twice in a year. 

 The State Level Enforcement Squad (SLES) constituted by the director of mines, carried out surprise checks and visits. 

SLES visited the Jajang and Gonua mines five times and three times respectively since commencement of mining operation. During inspection these committees have checked all statutory records, stacks, stock, screening & crushing plant etc. They also collected samples from bench faces and conducted screening and size analysis of ore. So far as the grade of ore is concerned, the analysis of samples collected by SLES indicated that the same is in line with the quality reflected by Lessee during mining operation. Recently the SLES Team has conducted screening of ROM twice in the last 3 months. It is verified that JSW carries out mining operations as per the mining plan and the Screened Fines & Lumps ratio are consistent with the Mining plan.

JSW Steel Limited is a public listed company having well established corporate governance. It said that any baseless allegations may tarnish the image of the company. In view of this JSW requested that the mining operation be carried out by government agencies like OMC and let the grade/quality and lump-fine ratio of the ex-lessee be maintained.

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