The state asserts its rights over a coveted iron-ore mine.

By Bharat Desai

In mining parlance, it is often described as the "crown jewel" because of its phenomenally high iron ore content. But mine 11-B at Bailadila in Bastar district of Madhya Pradesh has shown that there is more to it than just the hard metal. Its controversial sale to the Mittals of Nippon Denro Ispat Ltd (NDIL) for a paltry Rs 16 crore during the P.V. Narasimha Rao regime is history as the lease expired last month. Now, this "golden goose" has become the bone of contention between the state Government and a host of multinational mining giants on the one hand and the National Mineral Development Corporation (NMDC) on the other.

With the NMDC's 30-year lease over 14 iron ore mines in Bailadila also ending last month, the state Government has shown its inclination to renew the lease for all, except the coveted 11-B mine. "It's our property, why should we allow a public sector company to take it on lease and then sell it off when we can do this on our own," Chief Minister Digvijay Singh is reported to have told Union Steel Ministry officials recently. His principal secretary, mineral resources, S. Laxminarayan, was buoyant on returning from a two-week trip abroad. "Everybody is interested in the 11-B mine, the Mitsubishis, the Marubenis and the Zeigglers, apart from some Canadian and British companies," he said.

The Government's reluctance to let NMDC control all the leases in Bailadila stems from the controversial deal the corporation struck with the Mittals, allowing them 89 per cent equity in the joint sector Bailadila Mineral Development Company (BMDC). The deal had put the Rao government and the then minister of state for steel, Santosh Mohan Dev, in a spot of bother over allegations of kickbacks. Despite immense pressure from the Centre, the Digvijay Government put its foot down and refused to transfer the lease. Instead, it mooted a series of tough conditions to be incorporated in the lease deed, like 40 per cent equity to the state Government, reservation in jobs, employment to locals and construction of a hospital and a technical institute.

But with the issue now before the Delhi High Court in the form of a public-interest petition, the state Government feels free to negotiate joint sector deals with multinationals, instead of bringing the NMDC into the picture. "The BMDC was a stillborn baby, it was like planning a building without informing the landlord," says V.K. Dalela, secretary, mineral resources. However, it's clear that the NMDC is not willing to forego its right over 11-B which has the potential to generate profits of Rs 85 crore annually over the next 20 years. Already there are reports of the NMDC threatening to withdraw from participating in a railway project linking the three iron ore mines at Dalli Rajhara, Rowghat and Bailadila for which it has to cough up Rs 25 crore. "We have been hearing these rumours of an NMDC pull-out," says Laxminarayan. However, other officials say the NMDC's share in the Rs 500 crore railway project is "too small for any effective arm-twisting".

While state officials maintain that "signals" were coming from NMDC that it would back out of existing commitments unless all the Bailadila leases were renewed, Naresh Narad, joint secretary in the Ministry of Steel, described it as "totally unfounded". Narad says it is for the courts to decide on the fate of mine 11-B, but state officials feel the legal dispute will not come in the way of giving the mine to some other company, possibly in a joint venture with the Madhya Pradesh State Mineral Development Corporation.

And this won't be the first time that the state Government has looked beyond NMDC for mining its better deposits. Despite the NMDC showing immense interest in mining of diamonds in Chattisgarh, its bid was brushed aside in favour of multinationals which promised 500 times more returns than what the NMDC was offering for the Panna diamond mines. Whatever the outcome of the tussle over mine 11-B, the competition on the iron ore front in Bailadila with high-tech multinationals has once again shown the country's premier mining outfit in poor light. 

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