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After aggressively bidding for coal and iron ore mines, Sajjan Jindal-led JSW Steel is now incurring expenses to surrender them. The company, one of India’s largest steel producers, has written off ?445 crore this quarter to relinquish a coal block and an iron ore mining lease. A detailed feasibility study revealed that the Banai and Bhalumuda coal block in Chhattisgarh was unsuitable from a techno-commercial perspective, leading JSW Steel to decide against developing the block. During the December quarter, the Ministry of Coal terminated the coal block allocation. Consequently, the company incurred a bid security forfeiture and related expenses amounting to ?103 crore. Similarly, JSW Steel submitted an application to surrender the Jajang iron ore mining lease in Odisha due to high operational costs. The Indian Bureau of Mines, under the Ministry of Mines, approved the Final Mine Closure Plan for the Jajang block in October. Following this, the company recognized a net provision of ?342 crore to account for the carrying value of assets, inventory, and site restoration liability. An email sent to JSW Steel officials for comments remained unanswered at the time of publication. In February 2020, JSW Steel aggressively bid for the Jajang iron ore block in Odisha’s Keonjhar district, offering a 110% premium on the sale value of the ore mined. The block, with an estimated ore reserve of 39.42 million tonnes, was previously operated by Rungta Mines. Of the 20 mines auctioned at the time, JSW Steel submitted technical bids for five and won four. The decision to surrender the mines comes amidst rising concerns over operational costs and state government levies on mined ores. In addition to central levies, the Chhattisgarh government imposes a ?5 per tonne tax on coal mined in the state. Meanwhile, the Odisha government’s Orised Act of 2005 allows the levy of up to 20% of the annual value of mineral-bearing land. Metal and mining companies, including JSW Steel, challenged the state governments’ authority to impose these levies in the Supreme Court. However, in August 2023, the Apex Court upheld the states’ powers and permitted them to collect tax arrears retrospectively from April 1, 2005. The court ruled that these arrears could be paid over a staggered period of 12 years starting in April 2026. |
