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Ambarish Mukherjee

NEW DELHI, Oct. 21

KUDREMUKH Iron Ore Company Ltd (KIOCL) is facing the risk of premature closure in July 2004 following the public interest litigations initiated by environment protection groups and non-Governmental organisations (NGOs).

This is because the Central Empowered Committee (CEC) which was set up by the Supreme Court in May this year to hear the case has recommended just a five-year extension of the mining lease for Kudremukh Iron Ore Company Ltd (KIOCL), with retrospective effect from July 1999.

The company will cease to function after July 2004 if the Supreme Court accepts the committee's recommendations though the ore deposits in the company's mines are enough to continue operations till 2026.

This, according to company officials, will not only create problems on the domestic front but will also result in a failure to honour long-term contracts entered into with international buyers based in Japan, China and Iran for supply of concentrates and pellets. This would also lead to heavy penalties against the company and the burden would fall on the Central Government, which has promoted the company.

KIOCL is a 100 per cent export-oriented unit under the Ministry of Steel and the only profitable EoU run by the Government with around 2,500 employees on its roll.

Meanwhile, the temporary working permission given to the company by the Ministry of Environment and Forests (MoEF) expires on October 24. Interestingly, the CEC, which is chaired by the MoEF Secretary, has informed the Supreme Court in its recommendations that the permission issued to the KIOCL by his department was illegal.

The committee, in its report to the apex court, said that "the issue of the second temporary working permission by the MoEF to KIOCL is not contemplated in the guidelines framed under the Forest (Conservation) Act, 1980, and was in violation of the provisions of the said Act.''

This has put the MoEF in a peculiar Catch-22 situation. The Supreme Court, in its last hearing of the KIOCL case, has ordered that "till further orders, mining may continue.''

For KIOCL to continue mining beyond October 24, the MoEF needs to issue another fresh permission. But the CEC has already said that issuing the second temporary working permission itself was a violation of law. On the other hand, if mining does not continue beyond the cut-off date because of non-issuance of another permission by the MoEF, the Ministry faces the risk of contempt of court.

The case is scheduled to come up for hearing on October 22 .

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