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OMC: The Shrewd Player in Odisha's Mega Mining Scam


Bhubaneswar | 18

Last updated 10 Oct 2015 12:12:42 +0530

  Odisha, Mining Scam, Uliburu, OMC
Had Odisha Mining Corporation or OMC been able to operate in all the granted lease area, and had it met the global demand for iron ore, it would have earned a huge amount of money for the state as royalty and profit. Failure of OMC in meeting the demand of the international market as well as the domestic market, incentivized illegal mining by the private players.

A lot has been said and written about the mining scam in Odisha. But, hardly anyone knows that M/s Odisha Mining Corporation Ltd. (OMC), a Government of Odisha outfit, is the mother of all these scams and the operations of OMC have been manipulated to foster the mining scam in Odisha.

The demand for iron ore in the international market shoot up in the year 2000. That led to large scale extraction and export of iron ore from the mineral rich state, Odisha. The private lease holders violated all the norms stipulated by Forest Conversation (FC) Act, Environmental Clearance (EC), Indian Bureau of Mines (IBM), State Pollution Control Board clearances, surface right etc. to extract and export millions of tons of iron ore and minted money.

One can make an idea about the boom in mineral extraction from the fact that the collection of mining royalty of the state was only Rs 300 crores in the year 2000 and it shoot up to Rs 5000 crores in 2012. While the private lease holders, not even having the statutory clearances were making huge money, OMC was only an onlooker. It was extracting iron ore from only 10% of the mines under its lease.

It is worth mentioning here that Odisha Mining Corporation is the largest lease holder in the state in terms of reserve of iron ore. OMC’s mining operations were stuck as it could not avail the statutory clearances like Forest Clearance, Environmental clearance, Indian Bureau of Mines clearance and pollution clearance etc. Out of which Forest clearance was the major hurdle. While the private players managed to get the Forest Clearance within months, OMC was not able to get these clearances for years together even though a senior Indian Forest Service officer had been posted for the purpose.

OMC being a state government outfit and the Forest being a state subject, it should not have been too difficult for OMC to get the Forest clearance for genuine cases. But why OMC could not manage to get the forest clearances to scale up its operations while the private entities were able to get the clearances is an aspect that needs investigation. Was the failure of OMC in getting the statutory clearances a deliberate act to sabotage its iron ore extraction with the intention of promoting the loot of the iron ore? There are many arguments to substantiate this.

OMC, granted with 38 no. of lease holds, was operating only in 10 % of the lease area. From this the State exchequer earned royalty and profit to the tune of thousand crores. Had OMC been able to operate in all the granted lease area, and had it met the global demand for iron ore, it would have earned a huge amount of money for the state as royalty and profit.


Quotation starts

Many, involved in mining operations in Odisha, believe that the operation of OMC has been manipulated intentionally to benefit the private operators. As profit earned by OMC was only to add revenue to the state exchequer and not for the politicians, bureaucrats and the businessmen, OMC was deliberately limited to operate and illegal extraction was facilitated.

Quotation ends


Failure of OMC in meeting the demand of the international market as well as the domestic market, incentivized illegal mining by the private players. The private mines operators on the other hand were not able to meet the demand of the international market by operating the mines granted to them, abiding all rules and regulations. As the lure was very high, the private players violated the stipulations and extracted more than the approved amount of minerals from their lease area only by virtue of some of the statutory clearances. And the other from illegal mining in the areas that have neither been leased out nor have any statutory clearance. Had OMC operated all the mines under its lease, the illegal operators would not have got any opportunity to plunder the precious iron ore of the state.

During this period, i.e. from 2005 to 2009, OMC only was bidding for the iron ore on quarterly basis. The highest bidder in the auction was being selected to purchase the ore from OMC. All other lessees were following the sell price of OMC. So, this mechanism also indirectly fixed the price of the iron ore. Many iron ore trading companies who participated in the auction by depositing earnest money (EMD) and succeeded in getting the auction in their favour, did not lift the iron ore. These traders even did not bother to claim back their EMD. This raises serious doubt whether the auction of the iron ore was just an exercise by the mining lobby to manipulate the price? Could that explain why the traders did not lift the iron ore and get back the EMD either?  While this itself was baffling enough, the state administration did not bother about it.

Many, involved in mining operations in Odisha, believe that the operation of OMC has been manipulated intentionally to benefit the private operators. The profit earned by OMC is only to add revenue to the state exchequer and not meant for the politicians, bureaucrats and the businessmen. That is why the escalating demand in the international market and the high price for the ore was not encashed by OMC deliberately and illegal extraction was facilitated. This is the hidden story of mining scam that warrants thorough investigation. These aspects have not been investigated by the Hon'ble Shah Commission, Central Empowered Committee and the Odisha Vigilance department. This makes it a perfect case to be investigated by the Central Bureau of Investigation (CBI) as the Odisha government is a party to it.

OMC, unable to get the statutory clearances, was operating only 10% of the granted lease areas. The traders who won in bidding did not lift the ores. These were serious issues that warranted the attention and action by the State. But rather than addressing these problems and ensuring optimal operations by the OMC, Chief Minister Naveen Pattnaik was busy raising the demand for higher mining royalty to the state. Was the Chief Minister blissfully ignorant about these while singing his favorite tune of Central negligence or was he playing to the tune of the coterie of bureaucrats who were reaping rich dividends from the illegal mining operations? Was the whole issue of higher royalty just a diversionary tactics used by the Chief Minister Naveen Pattanaik, knowingly or unknowingly?

Whether Naveen Pattanaik knew of the conspiracy that was hatched to foster mining scam or not, He and his bureaucrat coterie knew for sure how to diffuse all the hue and cry about mining scam. Once the investigations about the mining scam started, the State government was proactive and it slapped penalty to the tune of Rs 70,000 crore on the mines owners for illegal mining (mainly excess mining). It earned kudos for the BJD government from Shah Commission and the Hon'ble Supreme Court of India. Even the CAG went to the extent of advising the state government on the utilization of the huge penalty to be collected from the mines operators involved in illegal mining. The voters of Odisha also were awe struck with the magnitude of money to be pumped into the development of the state.

But, here too the coterie took care, not to put the private mines operators in trouble. The penalty imposed by the government of Odisha was in accordance to the section 21(5) of the Mines and Minerals Development and Regulation Act. It is important to note it here that penalty can be charged under the section, 21 (5) only when the lessee has violated Section 4 of the Act. But excess mining comes under the purview of Environment Protection Act. So for the violation of Environment Protection Act, the lessee cannot be punished under the MMDR Act.  Those who knew about the developments, alleged that this was done deliberately to provide an escape route to the errant miners.

Soon after the state government declared about the imposed penalty on the errant miners at Bhubaneswar, BJD MP in Lok Sabha and a Supreme Court lawyer, Pinaki Mishra, briefed the media persons in New Delhi, “this demand raised by the government of Odisha is not justified. The mines owners will go to the court and the state government will not get a single pie form it.” This was enough an indication for the penalized mines owners and they clamored for Pinaki Mishra, yet another beneficiary of the mining scam. Many in the power corridors of Odisha believed that Advocate Mishra was advisor to both the state government as well as the mines owners in mining business. He knew it well that it was so complicated a case that would take years before a decision could be taken by the court.

The decision of the state government to impose penalty for excess mining resulted in closure of many mines and the lessees approached the Central Revisional Authority. The cases are yet to be disposed-off by the Revisional Authority. One lessee, GSI Mines, of Putulpani in Keonjhar district has been able get an order from the court in its favour to operate the mines despite non-realization of Rs. 116 crores of penalty imposed on it by the government for making excess production.

Whether the state gets a single pie from the errant mines operators or not has never been important for the Naveen Pattanaik government. It simply wanted to send out a loud message that it took action. Rs.70,000 crores have been demanded, large numbers of government officials have been suspended, lot of mines  are suspended are the messages that serve the purpose of making people believe that Naveen’s BJD government has taken prompt action. But how much the state of Odisha lost due to illegal mining operations, no one knows.

Now the demand for iron ore in the international market has slumped. One can say that there is almost no demand in the international market. That has taken away the incentive for illegal mining. Even if iron ore is mined, presently there are no buyers for it. Whatever profit was to be made had been made from illegal mining. So closure of mines now a day does not matter at all. Let the state lose royalty, let the state become backward, let the development of the state be affected – all these do not affect the State government or its greedy bureaucrats either. But what bothers people of the state is a proper inquiry into the root of the mining scam.

It needs to be mentioned here that after inquiry into illegal mining scam, the Justice Shah Commission in its report hinted hand over the inquiry to CBI as the politicians and the government employees were hand in gloves to plunder the mineral wealth. The inquiry report is still pending with the Hon'ble Supreme Court and direction for CBI enquiry is yet to come.

There is, however, no much discussion about illegal mining now. But what seems to be grooming as a bigger scam in the days to come is the phase-wise orders issued by the state government to allow lessees to resume mining operations after registering a supplementary lease deed in accordance with the Modi government’s amended MMDR Act. It is the captive mines those who had completed 50 years shall be allowed to mine for 15 years more till 2030 and non-captive mines are to operate for 5 years more till 2020 without renewal but with all relevant statutory clearances. Lot of mines have statutory clearances, but the phase wise release of orders by the state government makes one believe that the ruling party as well as the bureaucrats are making huge money against the orders being issued to resume mining operations. Those who are not agreeing to meet expectations of the power corridor are, probably, debarred to resume mining under some plea till they come to an unofficial agreement.

In the month of April 2015 the Odisha Government issued an order to eight of lease holds to execute supplementary lease deed and payment of stamp duty on registration. In this order, Rungta group, OMM group and Aryan group had been instructed to execute the supplementary lease deed and resume mining operation till 2020. But, while Rungta group and OMM group executed and registered the supplementary lease deed, the Aryan group (AMTC) was debarred. In a later thought, the Secretary of Steel & Mines Department, Odisha, intimated the District Magistrate, Sundargarh, to withhold the registration because of some inquiry regarding environmental issues on basis of a petition received from Mangala Kissan, a politician. The registration was withheld. As the Narayanposi mines of AMTC is yet to resume its operations, words in the air is that bargaining for opening the mines is on.

The whole story indicates how such a huge scam was engineered in the power corridor and how a cover-up plan is designed by them who, rather, should have taken the role of custodians of valuable resources.

[Author is Senior Associate Editor of HotnHitNews.Com.]

This is the part of a series of investigative reports on Hisaburu mining scam.

Read the other two reports:

Hiss of Hisaburu: Uncovering the story of a bigger mining scam

HISABURU: An Undiscovered Mega Mining Scam in Odisha


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