JSW Steel receives Rs 702-crore demand notices over ore grade at Odisha mines

(Representative image)

JSW Steel has received two demand notices of Rs 702 crore for its Odisha mines related to alleged loss of royalty, mining premium, and other levies, according to the company’s financial results for the quarter ended December 2022. The company has legally contested the demand.

In its note, JSW Steel said the company received showcause notices from the respective deputy directors of mines for Joda and Koira during the quarter under review. The showcause notices, the company said in its note, were followed by Rs 702 crore demand notices.

The demand pertains to allegations over a drop in the grade of iron ore mined during FY22 and the current FY23, compared to the submitted mining plan.

What the company says

“It is clear that it is not legal to issue such notices. That is why the Appellate Authority has given a stay here. It is not unique to JSW Steel to operate the way the mines are getting operated,” Seshagiri Rao, Joint Managing Director and Group Chief Financial Officer of the company, told analysts.

In its results note, the company said it has contested the demand with revision applications filed before the revisionary authority of the ministry of mines. The revisionary authority has directed the state government against taking any coercive measures related to the two demand notices until a response is provided by the state government, JSW Steel stated in its results note.

An email query sent to JSW Steel on Monday remained unanswered.

Earlier notice

This is not the first time the company has received a showcause notice from the state. In FY22, the Odisha government issued a showcause notice alleging a shortfall of minimum production quantity and a demand notice in August 2021, raising a demand of Rs 697 crore (including penalty) as prescribed in the Model Mine Development and Production Agreement (MDPA). The company legally contested this demand and received a stay for the same from the Odisha High Court in September 2021.