Chiria mining lease row threatens SAIL expansion

May 29, 2008

May 29 (Indian Express) – Public sector steel giant SAIL’s Rs 54,000-crore capacity expansion and modernisation programme is likely to be hit if the Chiria mines’ leases are not renewed immediately. The Jharkhand government is undecided on the issue despite intervention by the Centre. SAIL has embarked on an ambitious capacity expansion plan to ramp up production to 26 million tonne (mt) by 2010. It further aims to increase production to 60 mt by 2020, sources in SAIL said.

“If the leases are not renewed immediately, SAIL will have serious problems in proceeding with modernisation and expansion plans which have already commenced in full swing,” the source said, pointing out that the PSU’s Board has already approved investment of Rs 40,000 crore for the programme.

SAIL had applied for renewal of the Chiria mining leases from the Jharkhand government. Three of six leases were rejected during 2004-05, resulting in the PSU submitting a revision petition to the Mining Tribunal. The Tribunal quashed the Jharkhand government’s rejection orders and asked it to renew the leases. The state then approached the High Court, which reserved judgment after two hearings in August last year.

Thereafter, SAIL filed an interlocutory application seeking the constitution of a committee to resolve the mining lease dispute but the High Court quashed it. SAIL then filed a Special Leave Petition in the Supreme Court and, following a hearing in January this year, the apex court granted a stay on proceedings in the High Court and asked the state to reply to the SLP.

The delays in renewing mining leases affected SAIL’s expansion plans. As a result, the development of mines in Chiria, Rowghat, Taldih and Thakurani cannot be effected by 2010-11. Even the Parliamentary Committee on Public Undertakings has endorsed SAIL’s contention that it has a legitimate right on Chiria and asked the government to grant the Chiria iron ore mine lease to the steel giant. Prime Minister Manmohan Singh wrote to Jharkhand chief minister to look into the matter and ensure its early resolution. However, the state’s response of the state government was not encouraging, sources said.

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