Odisha Mining Corp's coal mine foray stumbles on lack of evacuation infra

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State-controlled Odisha Mining Corporation (OMC)'s plans to start commercial mining from its allocated Baitarani West coal block has run into hurdles.

The lack of coal evacuation infrastructure and the prevailing cloud on overburden dumping norms have constrained OMC's plans.

“For us, the evacuation of coal is a vexatious issue. Though Mahanadi Coal Railway Ltd (MCRL) has been formed for this purpose, not much ground has been covered. Lack of coal evacuation facilities has also held back our plans to acquire land. As per our estimates, land acquisition costs would amount to Rs 1,500-2,000 crore. OMC is ready to bear the expenses from its internal accruals,” said a senior OMC executive.

OMC proposes to invest Rs 2,500 crore on developing the Baitarani West coal block. The mine PSU will shortly go for appointment of a Mine Developer cum Operator (MDO).

Besides inadequacies in availability of coal despatch infrastructure, lack of clarity on overburden dumping area use has impeded progress of the commercial coal mine.

Initially, the Ministry of Coal had held that the OB dumping area cannot be utilised for commercial coal operations. Later, Central Mine Planning & Design Institute (CMPDI), a subsidiary of Coal India Ltd (CIL) has recommended some revision in norms for the OB dumping area.

OMC is a major player in iron ore and chromite mining. It has also kicked off production of commercial mining from Kodingamali bauxite block.

Bauxite auctions by OMC are biennial in frequency and are open to all aluminium producers. Traders can participate after the requirements of the end use industries are exhausted. Besides the auction mode, OMC has a long-term agreement with Vedanta Ltd to supply bauxite for feeding the latter’s Lanjigarh refinery in southern Odisha. The pact mandates OMC to offer 70 per cent of the bauxite mined from its lease at Kodingamali near Rayagada, also in the state’s southern belt, to the Vedanta-owned refinery.

But its iron sales have kept OMC’s cash registers buzzing. Major steel producers like Jindal Steel & Power (JSPL, Tata Steel, Jindal Stainless Ltd (JSL) and a clutch of other mid-sized and smaller scale steel manufacturers have been sourcing iron ore from OMC either at electronic auctions or via long-term pacts.

OMC is also a key iron ore supplier to steel plants and other end user industries with operations outside of Odisha.

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