India's Tata Steel to resume iron ore sourcing from its Jharkhand mines

29 September 2015

Tata Steel, the country's oldest steel producer, will be allowed to lift its mined ore from Noamundi in Jharkhand following payment of its first tranche to the state government over the weekend, a top official with Directorate of Mines and Geology, Jharkhand, told  Business Standard today.

“Tata Steel, over the weekend, has made a payment of Rs 124 crore to the state government. A letter will be sent to the company today so that it can start lifting the mined ore at Noamundi at the earliest,” the official said without revealing the total amount the company will be paying to the state government.

“The company will make the second payment before November 15 and the final tranche before December 15,” the official added.

Despatch of iron ore from the Noamundi mine to Tata Steel’s  Jamshedpur plant had been stalled since early July after the state government stopped issuing the required permits that allow transportation of ore. Tata Steel had to make a total payment of Rs 372 crore to the state government, which will now be done in tranches. Jharkhand’s move to ask the company to make this payment had come as an extension of an unresolved lease renewal. The Jharkhand government had failed to act on Tata Steel’s application for a lease renewal in 2009. The government then allowed the company to extract ore after the expiry of the lease on a “deemed renewal” basis. However, in 2014, the Jharkhand government decreed deemed renewal unlawful and demanded a penalty equivalent of the ore value extracted after lease expiry.

This led to a shutdown of the Noamundi mines on the instruction of the state government from September 5 to December 31, 2014. During this period, Tata Steel was forced to import iron ore for the first time. Tata Steel resumed operations at the Jharkhand mine on January 1, 2015, after receiving an ‘expressed order’ from the Jharkhand government. The Noamundi mine with a capacity of 10 million tonnes of iron ore annually, meets about 30 per cent of the total requirement of Tata Steel’s 9.7 million tonne plant at Jamshedpur.