JSW Steel may surrender two of the four mines it bagged in Odisha through auctions last year at steep premiums, SteelMint learned from industry sources.
Sources close to the company confirmed that the steelmaker may give up its right to Jajang and Ganua. The steelmaker feels “frustrated with legacy issues” of the deposits for which it committed steep premiums.
The premium, or additional percentage of sale value JSW has to pay for per tonne mined at Jajang is 110% and a whopping 132% of every tonne mined at Ganua. Mine Development and Production Agreements (MDPA) required these two operating mines to produce at 80% of an average of what it produced in the previous two years. Company officials could not be reached for comments.
SteelMint has learnt that a year later the steelmaker has failed to meet the MDPA target for Jajang. Sources close to the company say they expected the government to be more understanding, that the previous lessee produced about 3mt out of the 11.7mnt from dumps, or low grade ore of yesteryears. However, the Indian Bureau of Mines would not allow JSW to touch this material which was now state property, and it was still expected to meet its MDPA.
While Ganua according to industry sources is a mine of low grade, that the company is having a rethink about.
The company is believed to have paid Stamp duty of INR 321 crore for Jajang, a performance guarantee of INR 27 crore (which if it does surrender will be forfeited) and similarly stamp duty of INR 110 crore for Ganua and a performance guarantee of about INR 50 crore.
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