Kolkata,June 28
Odisha government, who has to submit a mechanism for supply of Iron ore to stand alone state based industry in an equitable manner along with a fair price before 3 Jul, 2014 (as per High Court’s order), has drafted a mechanism.
In Dec’12, the Odisha government had come up with the regulation, which has asked the merchant miners to sale 50% of their ore to state based industry at a fair market price. Meanwhile, the captive miners were excluded from the order.
However, the miners have been opposing the regulation saying it restrictive and there is no such provision in the MMDR or MCR act. Subsequently, the miners under the banner of Federation of Indian Mineral Industries (FIMI) had moved to Odisha High Court.
Later, the honorable Odisha High Court vide judgment and final order dated on 2 April upheld the 50:50 as being valid exercise of right of pre-emption under rule 27(1)(m) of MCR, subject to state evolving a mechanism (within 3 months) to give notice to mine owners of minerals quantum to be purchased and payment of price within reasonable time.
Mr UC Jena, Deputy Director of Mines, who participated in ‘Indian Pellet & DRI Summit’ conducted in Kolkata on 27 Jun, 2014 mentioned that a draft on mechanism for 50:50 rule has been formed and will be submitted to the High Court before 3 Jul, 2014.
How will it Work?
- Director of Mines (DoM) will act as a nodal agency
- Odisha based industry with no captive mines will tell their ore requirement (quantity, quality and type of ore) in a prescribed format to DoM on quarterly basis
- DoM will consolidate requirement from all the standalone mineral based industry (along with necessary documents like PAN card, trading licenses and other related documents)
- Iron ore purchased under this rule cannot be transferred, re-sold or exported in any form
- This rule will not be applicable for mining companies who already have agreements with state based industry for supply of more than 50% (OMC has almost 90% supplies reserved for state based industry)
- After consolidating requirement of Iron ore fines & lumps required by standalone state based industries , DoM has to get it approved from the state government
- State government will then indicate miners, the quantum of ore required and place of delivery, nominee name in first 10 days of every month for that quarter
- State government will also collect an amount of 10% on the total value of ore required in form of bank guarantee from the state based units (applicants) during that quarter
- Miners will have time to deliver the ore within 30 days
- Delivery of material can be Ex-mines basis or as per miner & plant agreement
- Sampling will be done at the point of delivery under supervision of Deputy Director of Mine (DDM)
- State based units can get third party sampling done 7 days before by giving consent to DDM
- The minimum purchase price will be fixed on monthly prices released by IBM (Indian Bureau of Mines) until & unless miner and state based units have come into price agreement
- Total value of ore has to be paid well in advance before taking the delivery
- Merchant mines are free to deal the rest 50% of the ore
- Exports from any port will be considered as sale outside the state
- In case any state based industry fails to lift the ore in time or fails to pay the amount that quantity will be offered to another state based industry. The former will be disqualified from this scheme of 50:50 and also bank guarantee will be seized
- In case, another state based industry also fails to lift the material, Director of Mines will take further direction from the state government
- All disputes arising related to this rule will be restricted to Bhubaneswar (Odisha) Court
Mr P L Kandoi, President of All Odisha Steel Federation (AOSF) said that draft looks fine, only issue will be with price. He mentioned that association has called a joint meeting with state based and Steel & Sponge iron units to discuss on the draft and take further step.
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