A threat by the government to de-allocate undeveloped coal blocks has come to the aid of beleaguered steelmaker Jai Balaji Industries which has been crippled by debt burden and operating losses.
A threat by the government to de-allocate undeveloped coal blocks has come to the aid of beleaguered steelmaker Jai Balaji Industries which has been crippled by debt burden and operating losses.
West Bengal Mineral Development and Trading Corp (WBMDTC), one of entities show-caused for delaying mine developments, has hurriedly re-started the process to begin work on the two coal blocks meant for Jai Balaji’s upcoming but delayed 5 million tonne (mt) steel plant in West Bengal.
The coal ministry on May 4 issued notices to entities which have been allocated coal blocks between 2004 and 2009 but are yet to start mine development works, threatening to de-allocate the mines if satisfactory replies were not given within a month.
At the time of allocation, a deadline of three years in case of open-cast mines and four years for underground mines was set for starting work. Two notices were sent to WBMDTC with respect to under-ground blocks in Ranigunj, Jaganathpur A and B, allocated in 2007.
WBMDTC, a state-government-entity then entered into exclusive pacts with Jai Balaji under the public-private partnership mode to develop both these mines for feeding the steel plant as well, a 1,215 mw power plant and 3 mt cement plant, all proposed at Raghunathpur in Purulia district.
With the threat of de-allocation looming large, WBMDTC has now approached the state pollution control board for required clearances with public hearing of these projects being fixed in the first week of July, DNA has learnt.
These two blocks have a combined reserve of 449 mt and recoverable coal of 125 mt.
Out of the total 1896 hectare of leasehold area of the two blocks, only about 65 hectare is required to be acquired for surface infrastructure, as per the environmental clearance project submitted.
According to mining plan submitted by WBMDTC, 1.4 mt would be extracted per year for Jai Balaji’s use.
The total capex for these two projects has been proposed at Rs750 crore. While the mining plan of both these blocks were submitted to the coal ministry by August 2011, according to WBMDTC, the show-cause notices mention that important milestones have not been achieved and the state agency has repeatedly failed to keep its promises to the ministry and is “non-serious” about timely development.
Jai Balaji also has stakes in two coal blocks held by two consortiums: Andal East Coal Co Pvt Ltd and Rohne Coal Co Pvt Ltd, where other steelmakers such as Bhushan Steel and JSW Steel are partners.
The development comes at a time when Jai Balaji is in talks with its consortium of lenders to restructure its Rs2,000 crore debt burden, for which a proposal to the Corporate Debt Restructuring Cell has just been made.
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