CAG flags violations of environmental norms in Odisha mines, unlawful mining worth Rs 5,467 cr

Bhubaneswar: The Comptroller and Auditor General (CAG) has highlighted significant violations of environmental clearance norms by mining operators in Odisha.

According to the CAG, two iron ore mines and one coal mine exceeded the production limits set by their Environment Clearances (ECs). This overproduction constitutes unlawful mining and is subject to the recovery of Rs 1,699.05 crore for the minerals extracted beyond the approved limits.

The report stressed that mining beyond EC limits can have severe and long-lasting negative impacts on the environment. The CAG’s findings, covering the fiscal year ending 31 March 2022, include a performance audit of the systems and controls in place for the assessment and collection of revenue from major minerals.

Additionally, the report revealed unauthorized extraction of minerals from forest land without the required approval from the Ministry of Environment, Forest and Climate Change (MoEFCC) in one chromite mine. This violation is liable for recovery of Rs 150.10 crore and potential penal action under the Environment Protection Act and Forest Conservation Act.

Furthermore, the CAG noted instances of excess mineral production beyond approved mining plans in eight iron ore mines, resulting in an additional recovery of Rs 3,618.50 crore. These breaches of environmental and mining regulations are likely to have adverse environmental effects on the affected areas, the report warned.

Decline of Reported Grade of Iron-Ore

It was observed after auction that in case of selected mines, there was an abrupt and abnormal decline in the grade of iron-ore and its classification reported by the new lessees. Though more than 83 per cent production was reported in the grade of 62-65% Fe in the pre-auction period, the same came down to approximately 16 per cent in the two years after auction (2020-2022). Similarly, share of grades 60% Fe and below went up from approximately 11 per cent of total production to more than 60 per cent of total production in the two years after auction (2020-2022).

Non-verification of sales turnover

There was a difference in the total sales turnover, reported by seven lessees, to the Commercial Tax (CT) department, as against the sales reported to the mining circles. This indicated a significant rise of lessees underreporting their sales turnover, in order to reduce their liability towards payment of royalty. The short-assessment of royalty, for these seven lessees, worked out approximately to ₹905.66 crore; with District Mineral Fund (DMF) of approximately ₹271.70 crore (30 per cent) and National Mineral Exploration Trust (NMET) of approximately ₹18.11 crore (2 per cent) also being leviable. Due to the extent of variation between the reported sales turnover between GST returns and annual returns in i3MS, Audit could not draw an assurance that the annual returns in i3MS contained declaration of correct and complete sales turnover by the lessees.