By Our Correspondent
NEW DELHI/BHUUBANESWAR/JODA/KOIRA: If things are not acceptable, the Ministry of Mines and Mines Owners in Odisha are likely to face off in near future after the Ministry wrote to States that direct payment and stamp duty for auctioned mines be annualise in view of the coronavirus pandemic.Ministry of Mines has intimated this to Union Environment Ministry as well as Chief Secretaries of mineral bearing States like Odisha, where 20 of the 21 mines auctioned recently with high premium over 170 per cent. Ministry wants payment over the year instead of a single instalment of the net present value (NPV) for diversion of forests. If this implemented, mines owners will pay the taxes annually instead of one time.
Mining rights of some 20 auctioned mines to resources worth nearly Rs 5 lakh crore were won by Sanjjan Jindal’s JSW Steel, his brother Naveen Jindal led JSPL, Laxmi Mittal owned AM/NS (ArcelorMittal-Nippon Steel JV), small players like Shayma Ores, Tarama Apartment, Foment, Kashiv Steel and Power Ltd, Sanatan Mahakud and others, who on an average have committed to pay an equal amount of their sale price to the state government. While Serajjudin Mines Group, KN Ram Mines of Atha Group and Ghanashyama Mishra and Sons have retained their running mines while big players Rungta Mines Group, KJS Ahluwalia Group and Essel Mining and Industries have jointly lost dozen over mines in the last concluding bidding. Jindal Brothers read Sajjan and Naveen played their cards.
Together, the 21 mines have approvals to raise around 70 million tonnes per annum. Most of the small to mid scale steel plants, sponge iron units and pellet makers are dependent on the merchant ore market to feed their units.With nationwide lockdown put in place and the consequential delay in paperwork needed to resume these mines is bound to delay the recommencement of the mines.“All successful bidders need a vesting order from the department before they could extract ore from the blocks”, sources said.
Before the 50-year mining rights are granted, the lessees are to pay 0.5% of the value of the total reserve. A back-of-the-envelope calculation works out to Rs 2,400 crore. There was also a performance guarantee of the same amount that they were to submit. But lockdown was announced before this could happen.
People in the know said letters of intent (LoI) have been given to a few miners. Vesting orders extending environment and forest clearances by two years were due next. At this point, the new lessee will have to pay 10% of the ‘upfront payment’. Under the rules, a lease is to be granted within a maximum of 30 days of this order, before which the new lessee would also have to agree to the terms and conditions and a minimum production commitment.The payment of NPV, which the letter also suggests be allowed in installments, was to be charged at Rs 7.5 lakh a hectare and be paid to the environment ministry on receiving the letter of intent.
“In view of this extraordinary (Covid19) situation, ministry of mines recommends that the state government similarly extend support and consider annualising the payment of ‘upfront payment’ that is needed for the execution of lease. Regarding the annualisation of the payment of stamp duty, the state government is requested to consider the request. For annualising the payment, the years to be taken into consideration may be in conformity with such concessions being extending by the state government to other affected industry,” said the mines ministry letter.
It clarified that this relaxation is being sought only for the period for which the pandemic exists, or till June 30, whichever is later, after which the winning bidder will be required to pay the balance amount before a deadline decided by the respective states.
A legal clarity may be required on the matter of the stamp duty on the lease, said a state government official, requesting anonymity.“The outbreak of Covid19 has created operational issues for the entire economy, including the mineral industry,” said the letter, which was signed off by a director in the ministry.Industry associations like Assocham, FICCI, CII and AAI have made representations on behalf of their members, seeking support for the sector in these difficult times, it said.
A letter from the Union steel secretary to state governments to ease lockdown orders on operative mines, steel industries, process plants as well as entry and exit of workers and movement of raw materials and finished products to and from the plant premises has not fully calmed frayed nerves.
