JSW may take legal recourse on coal block deallocation

JSW Steel today said it may take government to court following a Coal Ministry decision to deallocate Gourangdih ABC coal mine, allotted jointly to the Sajjan Jindal-led firm and Himachal EMTA Power Ltd.

"We have taken effective steps in development of mine and also in implementing the end use plant. We will take it up at appropriate forum either in the court or in the government, if they take that action which is not right," company's Joint Managing Director Seshagiri Rao told reporters here.

Replying to a specific query whether the company would take legal recourse, he said, "Of course, we have not done anything wrong here."

He added, however, "We have not received any official communication for deallocation, it is only media reports which we have been hearing."

Acting on a recommendation from an inter-ministerial group (IMG), the government on September 18 had announced to deallocated Gourangdih ABC block, allocated to JSW and Himachal EMTA jointly in July 2009.

The IMG has found that the project developers had failed to develop the block within the prescribed time and did not achieve critical milestones including forest clearance, grant of mining lease and land acquisition.

Coal from the block was supposed to feed a 300 MW captive power plant and is an integral part of JSW's much-delayed Rs 35,000 crore steel project, announced in 2007, in West Bengal. However, post deallocation, the company will be left with no coal for the proposed power plant and would have to rework its project development plan.

Rao, however, evaded direct answer to questions whether the deallocation of the block would delay the steel plant further.

"Greenfield projects in India take longer time. If you compare it with any other greenfield projects in India, JSW Steel has made a significant project. We have already spent close to Rs 500 crore. So if we are not committed, we won't spend that type of money," he said.

The Bengal project of JSW, envisaged to have a 10 million tonne steel plant and a 1600 MW captive power plant, has been delayed for various reasons since its announcement in 2007. This included a land acquisition row with the state government after Mamata Banerjee-led government took charge of the office last year.

Though the project got cleared later by the state government and land has been acquired, JSW has not been able to tie up iron ore supply agreement, which has led to delays in securing finances for the project.

"We are working on that. We will definitely tell you in next few months that when it (financial closure) will happen," Rao said.

The first phase of the plant consists of a 3 million tonne steel plant and a 300 MW captive power plant requiring investments worth Rs 20,000 crore.