The State-owned Odisha Mining Corporation (OMC) would soon face an acute financial crisis as it has to pay a fine of over Rs 3,000 crore for excess extraction of iron ore and manganese.
With the State Government soon issuing a demand notice of nearly Rs 2,200 crore to the OMC while implementing the Supreme Court’s order, the State PSU would face a tough time to comply with the notice as regards illegal extraction of iron ore and manganese.
Besides, a fine of over Rs 1,000 crore for excess mining would also be levied on the corporation.
So, the total burden on the OMC would be a whopping Rs 3,200 crore, said sources in the Directorate of Mines.
Notably, notices would be issued to all the erring mining leaseholders of the State, including the OMC, for recovery of fine of over Rs 20,000 crore for excess extraction of minerals.
The OMC had constantly enhanced its production of iron ore over last four years. While in 2013-14, its iron ore production was around 1.8 MT, it was increased to 3.1 MT during 2014-15, 6 MT during 2015-16 and further to 6.4 MT during the year 2016-17
While the cash-rich OMC was a regular dividend payer to the State Government, the recent Supreme Court order imposing fine on the illegal ores-extracting leaseholders has come as a big blow for the corporation.
The OMC is now having nearly Rs 2,000 crore in its kitty and has major expansion activities lined up for increasing its production and sales, according to official sources.
It has a target to ramp up production to 20 MTPA by 2019-20 by utilising its own financial resources.
The State mining major has set up an Odisha Mineral Exploration Corporation ltd (OMECl) as its 100-per cent subsidiary.
It has planned to conduct exploration activities for new mining sites. The scope of the exploration work has been listed out by a committee headed by the Director of Mines.
Four manganese blocks in Balangir district, four bauxite blocks in Rayagada, seven iron ore blocks in Khandadhar of Sundargarh district and one iron ore block in Thakurani-A have been identified for exploration through the OMECl.
These projects require huge investment, but now the OMC would have less liquidity to fund these initiatives.
So, the OMC would be left with no choice than borrowing funds from financial institutions for funding the major expansions, which would be really burdensome for it.