OMDC may wrest control of joint venture with Usha group in Oct

Orissa Mineral Development Company (OMDC) is set to wrest control of its minority joint venture with Vinay Rai-promoted Usha group that has partial rights to its iron ore mines and also a sponge iron plant.

In 1992 OMDC formed an agreement with Usha Rectifier Corp, now called Usha India, to form East India Minerals, with a 26% stake for production of sponge grade iron ore.

The agreement is coming to an end next month and now OMDC plans to take control of the venture as the Mineral Concession Rules that came into effect after the venture was formed do not allow such agreement to continue.

“The agreement (with the JV  partner) is going to expire in October.

At that time we would be able to take control of the joint venture, the assets and the stocks. The JV partner wanted the contract period to get extended but we had opposed it, as under the Rule 37 of the Mineral Concession Rules the extension is not permissible. The dispute had gone into arbitration and we hope that the award will come in favour of us and the agreement will get cancelled,” Tapan Saha, chief financial officer of OMDC told dna.

The venture was given permission by OMDC for mining in parts of its leasehold areas in Thakurani and Kolha-Roida iron ore mines.

In 2004, East India Minerals set up a 100 tonne a day sponge iron plant and in 2005-06 it started export of iron ore fines.

The mines ministry in 2009 issued detailed guidelines including those controlling joint ventures of a government company to whom a prospecting licence or mining lease is given.

OMDC, the iron ore mining arm of Rastriya Ispat Nigam Ltd, has six mining leases at Barbil in Orissa having reserves of iron ore and manganese ore.

All the mines, however, are not operating as forest and environmental clearances have lapsed and efforts are on to renew them. The environmental clearance for Kolha-Roida mines, in which the JV has partial control, has been received.

The reserve of the iron ore mines were pegged at about 206 million tonne, but OMDC now plans to estimate the reserves afresh once operation starts.

“The reserve figure is as per JORC report (Australasian code for reporting of exploration results). We will be getting our iron ore reserve estimated again once our mining leases are renewed.

This is important for assessing the worth of the company,” A P Choudhary, chairman of OMDC, who also heads RINL, said.