India Panel Probe Finds $9.5 Billion of Illegal Ore Mining

An Indian investigation alleged 592 billion rupees ($9.5 billion) of iron ore was illegally mined over a decade in the province of Odisha by companies including Tata Steel Ltd., the nation’s biggest steelmaker.

The M.B. Shah Commission’s report, presented in parliament yesterday, said the mining exceeded permitted levels and was carried out under political patronage in the eastern state from 2000 to 2010. Among the biggest companies named in the report are Steel Authority of India Ltd., Aditya Birla Group, controlled by billionaire Kumar Mangalam Birla, and Jindal Steel & Power Ltd. (JSP)

The Shah panel, formed by the government in November 2010 to assess mining irregularities in India’s mineral-rich states, said extraordinary profits from exports of iron ore and manganese were the main cause of illegal mining in Odisha and supported the regional government’s recommendation to ban overseas shipments. The federal government, which levies a 30 percent tax on exports of iron ore and 5 percent on pellets, has yet to decide.

In its first report in July 2011, the panel said that illegal mining in Goa had caused a loss of 349.4 billion rupees to the western state. Goa followed up on the findings with a ban on mining, eroding a quarter of the revenue of India’s biggest iron ore exporting state.

Recover Value

The Odisha government should recover the value of the illegally mined ore from the companies, the panel said in its latest report. It also suggested companies pay a higher share of revenue to provincial governments to ensure the welfare of local tribes and compensate for damage to the environment.

“No opportunity was given to mining companies to reply to the alleged violations,” Jindal Steel said in an e-mail. “According to us, there is no violation committed by our company and the assessment by the Shah Commission about our mine is not fair.”

Tata Steel and Aditya Birla Group spokesmen declined to comment, while a spokesman at Steel Authority of India didn’t answer two calls on his cell phone.

Spot iron ore prices at Tianjin port in China, the world’s biggest consumer of iron ore, peaked to $191.90 a ton in February 2011, causing a surge in exports from India.

Manohar Parrikar, Goa’s chief minister, said yesterday in New Delhi illegal mining in his state was a result of a surge in global prices. The loss estimate to his state was exaggerated and that a realistic figure “could be about 10 percent of the Shah Commission’s estimates.”

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at

To contact the editor responsible for this story: Jason Rogers at

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