Birla Group walks out of Rs 27,000 cr mining contract

 

 

 

 

Coal India’s efforts to achieve a billion-tonne production mark continue to face roadblocks due to uncertainties in Chhattisgarh, the country’s largest coal producer. In a latest development, Essel Mining & Industries (EMIL) of Aditya Birla Group, has decided not to proceed with Rs 27,000 crore mining contract from Coal India in Chhattisgarh. Reasons behind this being fathomed are unfavourable policies of the State Government. Coal India Limited (CIL) subsidiary South Eastern Coalfields Limited (SECL) acknowledged Essel Mining’s successful bid in December 2022 with the Letter of Acceptance (LoA) for the mine development and operation (MDO) contract of Madannagar Coal Block. However, to date, Essel Mining failed to complete the mandatory formalities, such as furnishing a ‘Performance Security Deposit’ (PSD) and executing the Mining Agreement to formalise the contract. EMIL is one of the country’s leading diversified natural resource companies having mining operations in the states of Odisha, Madhya Pradesh, Chhattisgarh and Jharkhand. EMIL holds a leading position in the Indian mining industry for adoption of modern mining technology in its operations. According to well-placed sources, SECL recently terminated its Letter of Acceptance and also has withheld Essel Mining’s ‘earnest money deposit’ after waiting and following up for about eight months. “With this, now the fate of Madannagar Block hangs in balance since SECL lacks the expertise and ability to develop this block on its own and needed the support of the private player,” the sources averred. Sources recalled that the SECL had floated a tender in August 2021 to select MDO contractor for its Madannagar coal block in Bhatgaon Area in the Surguja district of Chhattisgarh.

 

Madannagar coal block would have produced 12 million tonnes of coal annually, which would have contributed immensely in achieving Coal India’s one billion tonne coal production mark and Chhattisgarh’s exchequer. “This is yet another withdrawal of a big-ticket project by a large industrial house in Chhattisgarh. Due to uncertain government policies coupled with a high level of politicisation on coal blocks mining in Chhattisgarh, investors are shying away from investing here. Chhattisgarh government’s abrupt decision to expand the size of Lemru Elephant Reserve fourfold has jeopardised the fate of close to 40 coal blocks,” said an office-bearer of a trade body in Chhattisgarh, requesting anonymity. The mandarin added that the people of Chhattisgarh would have benefited immensely had the Congress government not increased the size of Lemru Reserve from 450 Sq. Km to 1996 sq. km without offering any plausible explanation. Despite having abundant potential due to advantages of its geographic locations and natural resources, Chhattisgarh is not on the radar of serious investors, he asserted.

 

Incidentally, this is yet another big-ticket project facing uncertainty in Surguja district which is represented by veteran Congress leader and Deputy Chief Minister T S Singhdeo. Despite repeated requests from his senior party colleague and Rajasthan Chief Minister Ashok Gehlot, Chhattisgarh Chief Minister Bhupesh Baghel has not allocated additional land to Rajasthan’s state-owned power generation utility for the next phase of its captive mine. “Expanding Rajasthan’s PEKB Block coupled with the development of SECL’s Madannagar Block would have proved a boon for backward Surguja district with thousands of job opportunities,” said a community leader of Surguja. The fate of the Madananagar Block is also further jeopardised since Congress-led Chhattisgarh has launched an aggressive campaign against SECL’S MDO contract with Adani Enterprises for Pelma Block in the past few days.