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Excess mining penalty over Rs 3k cr to severely impact OMC’s finance




 Soon State PSU, Odisha Mining Corporation (OMC) will be facing acute financial crisis as the erring mining major will coughing up over Rs. 3000 crore to be paid as penalty for excess extraction of minerals.

With the State Government likely to issue a demand notice of nearly Rs.2200 crore shortly to Odisha Mining Corporation (OMC) while implementing Apex Court orders, the State PSU will be facing tough time to comply with it.

The State government has no option left than issuing the demand notice to OMC as SC’s order is too clear for excess mining.

OMC will bear a major burnt of Rs.2200 crore towards penalty for excess mining of Iron Ore and Manganese.

Penalty for excess mining of Chromite in violation of forest and environmental clearance will also be levied on the mining lease holders.

Sources in Directorate of Mines said the total penalty amount of OMC including over Rs.1000 cr towards excess mining of Chromite will be a whopping over Rs.3200 crore.

While notices are being prepared to be issued to the mining lease holders for recovery of over Rs.20,000 crore for excess extraction of minerals, OMC is going to bear the maximum brunt.

OMC has constantly enhanced its production of iron ore over last 5 years.

While in the year 2013-14 the total iron ore production was around 1.8 MT, it was increased to 3.1 MT during 2014-15, 6 MT during 2015-16 and further to 6.4 MT during the year 2016-17

It may be mentioned here that OMC has been a regular dividend payer to the State Government and the recent Supreme Court order has come as a big blow for the State owned PSU.

OMC is having nearly Rs.2000 crore in its kitty and major expansion activities are lined up for improving its production and sales, said official sources.

OMC has targeted to ramp up production to 20 MTPA by 2019-20 by utilizing own resources in its kitty.

Meanwhile, the mining major has set up Odisha Mineral Exploration Corporation Ltd (OMECL) as a 100 Percent subsidiary of OMC.

The OMECL was to conduct exploration activities for new mining sites.

The scope of the exploration work has been listed out by a panel headed by the Director of Mines.

Four manganese blocks in Bolangir, four bauxite blocks in Rayagada, seven iron ore blocks in Khandadhar, one iron ore block in Thakurani-A have been identified for exploration through OMECL.

These projects require huge investment and OMC will have less liquidity to fund these initiatives, said sources.

OMC, therefore, will be left with no choice than borrowing from financial institutions for funding the major expansions, which will be really burdensome for the State PSU, said sources familiar with OMC affairs adding that against this backdrop, OMC management is seriously working out ways and means to deal with the situation.






Editorial

Précis 2017
From asking his party men to ‘live a simple life and serve the people’ to taunting the BJP for its ‘crocodile tears’, Chief Minister and BJD supremo Naveen Patnaik has not only become politically invincible, he seems to be so in the coming years too.

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