Revenue implication of Rs 4,162 cr as Odisha’s iron-ore grade declined: CAG

The audit report claimed that it is “extremely improbable” that the grades of mineral books, generated from the auctioned mines, would certainly witness an abrupt decrease within a short period of a couple of years, especially, when there was a constant pattern in the quality of iron-ore manufacturing in the last six years’ time under the old lessees.

In a similar way, the auditor claimed, the share of grades 60 per cent Fe and below rose from roughly 11 per cent of total manufacturing to more than 60 per cent of complete manufacturing in both years after public auction (2020-2022).

“The decline of grade of iron ore has actually led to an earnings ramification of approximately Rs 4,162.77 crore for the fiscal years 2020-21 and 2021-22 in the form of lower nobility and costs (message auction)”, the CAG claimed in its report No 6 of the year 2024, which was laid before the Odisha Assembly on Wednesday.

“For that reason, the present standing plainly suggests the existence of system failure to prompt find the real qualities of penalties and lumps created, which adversely influenced the state government profits,” the CAG claimed in its audit report.

“It is evident that after the auction of leases under the Mines and Minerals Growth and Regulation (Amendment) Act, 2015, there was a high and inexplicable decrease, in the reported production of greater grade of iron-ore from the same mines, within a brief duration of one or two years,” the CAG record stated.

According to the report, the state government has created a board led by the director of mines and geology to study the disparity in downgrading and misreporting of size of ore and the committee observed reduction of ore in 3 leases and inconsistency in dimension of ore in 6 leases.

In spite of such an abnormal decline in the qualities of iron-ore swellings and penalties, showing the danger of misreporting, the CAG record said, adding the state federal government had “not taken any type of actions to investigate” the grades of iron-ore production reported by the brand-new lessees since March 2022.

“A comparable fad was likewise discovered when it comes to production of penalties. In the case of one iron-ore mine under the Joda Circle, the average production of lumps of qualities over 60 percent Fe was about 77 percent prior to public auction, which drastically minimized to 9.88 per cent within one year, in the fiscal year 2020-21,” it claimed.

More than 83 per cent production was reported in the quality of 62-65 per cent Fe (iron) in the pre-auction period, the very same came down to roughly 16 per cent in the 2 years after public auction (2020-2022), it said.

“Such a significant and sharp decrease in the quality of iron-ore suggested a significant danger that the new lessees were misreporting the grade of iron-ore created, in order to avoid greater aristocracy that would have been payable on higher grades,” the record claimed.

The Business Manager and Auditor General of India (CAG) which carried out an audit of six iron-ore mines in Odisha has observed that after the public auction of the chosen mines, there was an “abrupt and uncommon decrease in the grade of iron-ore and its category”, as reported by brand-new lessees.