BHUBANESWAR: Sajjan Jindal-led JSW Steel has offered to surrender one of the four iron ore mines it bagged through e-auctions last year at steep premiums. In its August 11 surrender notice to the Director of Mines, the steelmaker has expressed its inability to operate Gonua iron ore mines in Sundargarh district due to low grade ore and logistics problems.
"We intend to surrender the entire area of Gonua iron ore mining lease under Rule-21 of Mineral Concession Rules (MCR), 2016 with effect from August 12, 2022 and we will submit the final mine closure plan before IBM," said the authorised signatory of the company in the notice.
JSW had executed the mining lease deed on June 27, 2020 and commenced mining operation on July 1, 2020. "The mining operation has become economically unviable due to high shale in bottom benches, low grade mineral in top benches and serious logistic issues due to space constraint," the notice said.
As Gonua iron ore block is a working mine with an estimated reserve of 118 million tonne (MT), the company has requested the State government to accept the surrender proposal and clarify IBM in case any query raised by it while processing the approval of final mine closure plan.
In an aggressive bidding, JSW Steel emerged the preferred bidder for Gonua iron ore block with an offer to pay a premium of 132 per cent.
The steelmaker with a production capacity of 18 million tonne per annum (MTPA) had also bagged Nuagaon iron ore with highest reserve of 792.93 MT, Narayanposhi iron ore block with a stock of 190 MT and Jajanga block with a reserve of 39.42 MT.
JSW Steel has proposed to set up a greenfield steel project of 12 MTPA near Paradip in Jagatsinghpur district at an investment of over Rs 53,000 crore.
Sources in the mining industries said JSW may give up its right to Jajanga iron ore block for reason similar to Gonua. In both the cases, the lessee failed to achieve Model Mine Development and Production Agreement (MDPA) under which the mines owner have to produce at least 80 per cent of the average production of the previous two years.
On August 13, Joda Joint Director of Mines served a notice to Jajanga iron ore block of JSW Steel citing demand on shortfall in despatch vis a vis the minimum dispatch required under Sub Rule 1 of 12A of Other than Atomic and Hydrocarbon Energy Mineral Concession Rules, 2016.
The company is learnt to have paid stamp duty of Rs 110 crore for Gonua and a performance guarantee of about Rs 50 crore.