BHUBANESWAR: The Comptroller and Auditor General (CAG) of India has found an abrupt and abnormal decline in the grade of iron ore and its classification post-auction, resulting in a revenue implication of around Rs 4,162.77 crore in two years.
After conducting an audit of six iron ore mines in Odisha, the CAG observed though more than 83 per cent production was reported in the grade of 62 to 65 per cent Fe (iron) in the pre-auction period, it came down to around 16 per cent in two years (2020-2022) after auction.
“The share of grade 60 per cent Fe and below went up from approximately 11 per cent of total production to more than 60 per cent in the two years after auction. A similar trend was also noticed in the case of production of fines,” the CAG stated in its report tabled in the Assembly.
Citing the case of an iron ore mine under Joda circle, the audit said, average production of lumps of grade 60 per cent Fe and above was about 77 per cent before auction, which drastically reduced to a mere 9.88 per cent within one year (2020-21) and further reduced to zero per cent during 2021-22 after new lessee started operating the mine.
“It is highly improbable that the grades of mineral reserves, produced from the auctioned mines, would witness an abrupt decline within a short period of one or two years. Such a significant and sharp decline in the grade of iron ore indicated a significant risk that the new lessees were misreporting the grade of iron ore produced, in order to avoid higher royalty and premium payable on higher grades,” the report said.
The changes in reported grades of production of lumps and fines after auction as compared to the consistent pattern in the grade of production as reported by the older lessees have resulted in a revenue implication of approximately Rs 4,162.77 crore in 2020-21 and 2021-22 in the form of lesser royalty and premium post auction, it added.
Production of minerals in excess of the limits stipulated in the environment clearance (EC) was noticed by the CAG in two iron ore mines and one coal mine, which are liable to pay Rs 1,699.05 crore for unlawful mining.
There had been unauthorised extraction of mineral from forest land, without due approval in the case of one chromite mine, which is liable to pay Rs 150.1 crore. Similarly, eight iron ore mines produced minerals in excess of the limits stipulated in the approved plans, attracting a levy of around Rs 3,618.5 crore.