Mining suspension forces closure of Tata Steel’s Odisha plant

Tata Steel Ltd has shut down its 50,000 tonnes per annum ferroalloys plant at Bamnipal in Keonjhar district of Odisha due to raw material shortage caused by suspension of a mining licence, the company said in a statement late on Friday.

Tata Steel sourced ore for the Bamnipal plant from its captive chromite mine in Sukinda, where operations had to be suspended from 17 May this year because of non-renewal of lease.

Tata Steel said the plant was running with available raw material stock before being shut on 4 August.

The suspension of operations at Sukinda and Bamnipal would mean more than 6,000 job cuts, the company said.

Tata Steel tried its best to run the ferro alloys plant at Bamnipal with available inventory and using innovating practices, till 4 August, 2014, reports quoted a Tata Steel spokesperson as saying.

''Suspension of operation at Sukinda and Bamnipal has impacted livelihood of more than 6,000 persons with loss of revenue to the government to the tune of Rs300 crore per annum,'' he added.

The mine lease issue is entangled in court case involving several other alloy steel makers, including Indian Metals and Ferro Alloys (IMFA), Balasore Alloys (earlier Ispat Alloys), Jindal Stainless Ltd (JSL), Ferro Alloys Corporation (FACOR) and Nav Bharat, who have sought reduction in Tata Steel's chromite lease area.

Tata Steel's application for renewal of Sukinda lease, which expired in 2013, is pending before the state government. But the Odisha High Court has restrained the state government from taking any decision on extending Tata Steel's mining licence till the petitions challenging the company's need to retain the full lease area are dismissed.

Five firms, Indian Metals and Ferro Alloys (IMFA), Balasore Alloys (earlier Ispat Alloys), Jindal Stainless Ltd (JSL), Ferro Alloys Corporation (FACOR) and Nav Bharat, have gone to the court seeking reduction in Tata Steel's chromite lease area.

The five firms pleaded that the chromite reserves in Tata Steel's lease area far exceeded its requirement while they had partial or no ore linkage for their units.

According to Tata Steel, except Nav Bharat, all other firms have captive mines which partially met their requirement.

It may be noted, that the Supreme Court had reduced the lease area of Tata Steel from 1,261 hectare to 406 ha in 1993 and had ordered redistribution of the balance 855 ha among IMFA, Ispat Alloys, JSL and FACOR in a similar petition.

State-owned Odisha Mining Corporation had then retained 50 per cent of the area freed from Tatas' hold and distributed the rest area among the contenders.

The Sukinda mines has estimated chromite reserves of 80 million tones and Tat Steel's projected  requirement for a 20 year period was only 16 million tonnes, rendering the remaining 64 million tonnes reserves eligible for redistribution among other alloy steel makers, according to the report of the Sharma committee appointed by the Supreme Court in 1993.

The Bamnipal plant was set up originally by Orissa Mining Corporation in 1986. The plant, however, was running at 50 per cent capacity utilisation for years and it was sold to Tata Steel in September 1991, in the first divestment of the Odisha government.

The High Court is scheduled to hear the case again in the week beginning 18 August.