In a significant development, JSW Steel has apprised the Odisha government’s Directorate of Mines expressing its willingness to surrender the Gonua iron ore mine in Odisha. As per a letter sent by the company to the Odisha government – a copy of which is with SteelMint – the steelmaker intends to surrender the entire lease area of the 2.99 mn t/year mine in Odisha’s Sundergarh district.
The key reason cited for surrendering the mine is that mining operations, according to JSW Steel, have become unviable owing to a) the presence of shale in the bottom benches, b) low grade of mineral in the top benches, and c) severe logistical problems due to space constraints in the lease area.
The leading steel producer had won the mine – along with three other iron ore mines – for a premium of 132% at the Odisha auctions in 2020. The company had signed the lease deed with the state government on 27 Aug’20 and had started operations at the mine on 1 Jul’20.
In mid-Jul’21, JSW Steel had declared its intention of surrendering both Gonua and Jajang iron ore mines in Odisha due to “legacy issues”. The steelmaker has failed to meet the MDPA target for Jajang by around 15%, as per latest reports. The Directorate of Mines is yet to issue a demand claim, however.
The company may also soon surrender the Jajang iron ore mine, sources informed SteelMint. The steel major had paid a stamp duty of INR 110 crore for Gonua and a performance guarantee of about INR 50 crore. JSW had mined 0.77 mn t from the Gonua mine in FY’21.
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