CoalMin set to cancel another block,R3,700 crore at stake

CoalMin set to cancel another block,R3,700 crore at stake

JSPL & Nalwa Sponge Iron get notice for block in Chhattisgarh.

Investments of over Rs 3,700 crore for developing a mega captive coal block in Chhattisgarh is likely to turn sour for the banks who loaned the money as the coal ministry is preparing to cancel the allotment of the block.

The block,Gare Palma IV/6 in Chhattisgarh’s Mand Raigarh coalfields was allotted to Jindal Steel and Power Limited (JSPL),promoted by Navin Jindal and to Nalwa Sponge Iron Limited on January 13,2006.

The ministry has served a show-cause notice to the companies on December 20,asking them to explain the delay in developing the mine,failing which,allocation could be cancelled. The block has coal reserves of 156 million tonnes.

What has emerged,however,is that the ministry has been sitting on the previous approval for grant of mining lease,and has vetted JSPL’s mine closure plan only last month,despite the plan being submitted two years ago.


The finance ministry has expressed concerns as the recent cancellation of 11 blocks allotted to 18 companies has resulted in a financial burden of over Rs 24,400 crore,the sunk capital that has gone into making the mines operational. Another Rs 3,753 crore would be added to this sum after the cancellation of the Gare Palma IV/6 block.

The coal ministry’s tough stance stems from a complaint by the Chhattisgarh government that the JSPL-Nalwa Sponge consortium has failed to develop the block,and has not declared the investment made towards operationalisation of the mine.

The block spanning Gare,Lamdarha,Saraitola,Khamharia,Karwahi and Tehlirampur villages in Raigarh district was given to JSPL as the lead company to set up a sponge iron plant of 6.6 lakh tonne per annum capacity along with a captive power generation unit.

“We do not know the amount of investment made by these two firms as they have not informed us. They say they have invested,but we need documents certifying the investments. We hope they would furnish this information by January 9,the date of the meeting slated in Delhi to be chaired by coal secretary,” Chhattisgarh mines secretary Munish Kumar Tyagi told The Indian Express.

A spokesperson for JSPL denied Tyagi’s allegations. The spokesperson said that the company has given the details on investments made and the end-use project every quarter,duly audited,to the coal controller,functioning under the coal ministry. The coal controller is the nodal officer monitoring the status of coal blocks and the progress of the end-use projects.

The state monitoring committee which asked for status report for the first time in July this year,was given an investment figure of Rs 28.45 crore up to June 30.

“The certificate from chartered accountant was not given as they did not ask for it,” the spokesperson said.

JSPL said the delay is also on account of the coal ministry holding back the previous approval for granting the mining lease since June 2009.

The state needs to issue the grant order (for executing the mining lease) for land acquisition to being. This can be done either through surface right,or by the state government. The state can issue that order only after the coal ministry sends the previous approval to the state,the spokesperson said. “It is very unfortunate that approvals,which are to be granted by the Central government are being delayed and the company is being issued a show-cause notice.”

The coal controller had informed the coal ministry in July about the tardy progress by JSPL in developing the Gare Palma IV/6 block.


This is the latest case of block cancellation involving JSPL. The coal ministry has,on a resolution by an inter-ministerial group,recommended cancellation of the Amarkonda Murgadangal block in Jharkhand that was allotted jointly to Gagan Sponge Iron. The other blocks are Ramchandi Promotional in Orissa,the site for JSPL’s coal-to-liquid project and the Urtan North block in Madhya Pradesh,jointly allotted to Monnet Ispat and Energy.