JSW Steel Ltd might take legal recourse against the government’s recent decision to cancel the allotment of a coal block to the company. The Gourangdih ABC block, located in the Raniganj coalfield in West Bengal, was to feed JSW’s captive power plant linked to a 10,000-million-tonne (mt) steel plant in the state.
“We will take up this matter at the appropriate forum, either in the court or with the government itself. This will be after we receive a formal notification of deallocation,” Seshagiri Rao, joint managing director of JSW Steel, said. “We have taken effective steps in development of the mine and also in implementing the end-use plant.”
JSW Steel, led by Sajjan Jindal, brother of Congress Parliamentarian and industrialist Naveen Jindal, had announced plans to spend Rs 35,000 crore to set up the mega steel plant in 2007. In the first phase, the steel maker wants to invest Rs 16,000 crore to build 3-mt steel-making capacity. The project involves the setting up of a 1,600-Megawatt captive power plant, which was to source coal from the Gourangdih block.
Rao said JSW Steel had been “committed” to the development of the project, including the block. The coal ministry had cancelled the block’s allotment last month as the company failed to meet critical milestones for its development, including green clearances and land acquisition. The Gourangdih block was allocated jointly to JSW Steel and Himachal EMTA Power Ltd in 2009.
It was one of the seven allotments axed by the government last month as part of an exercise to review the progress of 195 captive coal blocks. This came in the wake of alleged irregularities in coal block allocations, which, according to the Comptroller and Auditor General of India, caused a notional loss of Rs 1.86 lakh crore to the exchequer.
JSW’s current steel-making capacity of 14.3 mt, which includes 10-mt Vijaynagar plant in Karnataka. Its production has been severely affected since the Supreme Court imposed an interim ban on mining in the state in August last year.
The company is currently utilising 85 per cent of its total capacity as additional iron ore has become available from e-auctions.
JSW Steel’s share price today closed at Rs 773, up 3.63 per cent, on BSE, when the benchmark Sensex gained 0.93 per cent to close at 18,804.75 points.