Tata Steel to Contest 56 Billion Rupee Mining Penalty Notice

Tata Steel Ltd. (TATA), India’s biggest producer of the alloy, will contest a 56 billion rupee ($1 billion) fine imposed by the eastern state of Odisha, alleging violations of mining norms.

“We’re contesting both the number and the cause,” spokesman Charudatta Deshpande said in e-mail today.

The notice coincides with the investigations being held by a federal government panel that is probing violations of illegal mining in seven Indian states, including Goa, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha and Karnataka. The panel is currently assessing mining breaches in Odisha. Goa banned iron ore mining from Sept. 11 after the panel in a Sept. 7 report to the lawmakers said the state may have lost 349.4 billion rupees because of illegal mining.

“Tata Steel will contest this and I don’t think it will have to pay this fine,” said Goutam Chakraborty, analyst at Emkay Global Financial Services in Mumbai. “Legally there are clear doubts about the viability of such a penalty,”

Shares of the Mumbai-based company rose as much as 0.2 percent to 398.6 rupees and traded at 398.2 rupees as of 2:55 p.m. in Mumbai.

Tata Steel received a notice from the provincial government, Deshpande had said yesterday. The company has been fined a $1 billion for over-mining in the state, the Wall Steel Journal reported today, citing a person familiar with the matter. The state has fined several companies for excessive mining, the report said, citing Odisha’s Director of Mines Deepak Kumar Mohanty.

While Odisha alleges excess extraction at the Tata Steel mines, which started about a decade ago, the state knew how much was being mined based on the taxes it collected, Emkay’s Chakraborty said. The company has mined in conformity with the laws and is confident of resolving the issue with the government amicably, Deshpande said yesterday.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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