Law ministry to decide Posco mine fate

NEW DELHI: The law ministry is now set to take a final call on the fate of the captive mine for Posco’s proposed 12-million-tonne Orissa project.

The ministry of mines has sought legal opinion from the law ministry on whether the Orissa government could use discretionary powers available to it under Mines and Minerals (Development and Regulation) Act to offer mines to Posco disregarding claims of other applicants over the same block.

Section 11(5) of the MMDR Act envisages that a state government may for any “special reasons” grant mining rights to an applicant whose application was received later, in preference to other applicants whose applications came earlier.

However, in doing so the state has to justify in writing why a particular applicant was allowed to jump the queue overriding the principle of first-come-first-serve.

“The Orissa government feels that Posco is a more deserving candidate for the iron ore mining block as it would not only pump in huge investment and create jobs, but would also undertake value addition of the iron ore into steel. This is not the case with other applicants for Khandadhar iron ore block, including Kudremukh Iron Ore Company (KIOCL), which wants to mine ore for sales without any further value-addition,” a government source said.

However, the law ministry’s opinion has been sought as the state government wants to avoid its decision being challenged in court by other applicants for the same mining block. KIOCL has already taken the matter to court. But being a government company, it is understood that the Centre is using its influence to get KIOCL withdraw its case in favour of Posco.

Earlier, the Centre had asked the Orissa government to consider Posco India’s mining proposal in light of existing provisions of the MMDR Act that permits clubbing together all applications for a notified mining block, irrespective of their date of receipt.

However, sources said the state is not sure whether the entire area of Khandadhar mines is notified or not. This is because the power to club together all applications can be used only in case of notified mining areas, which means some sort of geological survey would have had to be carried out earlier by a government agency.

Even if a portion remains outside the notified area, this could get embroiled in litigation. So the state is now exploring the legality of invoking its powers under Section 11(5). The Orissa government has thrown open an area of 83.65 square kilometre (Khandadhar mines) for iron ore mining in 1991.

Since then about 252 applications have been received for the block that has reserves of about 180 million tonne. Posco India’s application, which was filed in September 2005, is among the last for this block.