Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Tata Steel Ltd. (NSE:TATASTEEL), India’s largest private steelmaker, is contesting a $1 billion fine for allegedly mining above volume limits in the mineral-rich eastern state of Orissa, which —ironically— is one of the South Asian country’s poorest regions.
The company refuses to pay the lofty fine saying that it “has paid royalty and taxes for whatever ore has been mined over and above the permissible limit,” a spokesperson told Firstpost.
Tata Steel operates a number of mines in Orissa, including facilities producing iron ore for its steel facility at Jamshedpur, in the neighbouring state of Jharkhand.
The Mumbai-based group is building another 3-million-tonne steel plant in Orissa. Which is down from its earlier plan of a 6 million tonne initial capacity after protests from residents on the allocated land.
Tata is not the first company to be hit by fines and investigations into corruption in India’s extractive industry. Several other miners have been recently levied in Orissa with fines totalling nearly $13 billion, which lead to total mining bans in the western states of Goa and Karnataka.
Those decisions were influenced by a scathing report by Human Rights Watch published in June, which deemed India’s 2,600 mines “out of control”, pointed out “pervasive lawlessness in India’s scandal-ridden mining industry” and an inability to protect local communities.
Orissa accounts for a third of country’s iron ore — a vital steel making material– production. It also holds a quarter of India’s coal, and half its bauxite.
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