Tata Steel Faces ₹1,902.72 Crore Demand Notice Over Mineral Dispatch Shortfall

Tata Steel's Legal Challenge Against Demand Notice

Mumbai/Jajpur: Tata Steel announced on Friday that it has been issued a demand notice amounting to ₹1,902.72 crore by the Deputy Director of Mines in Jajpur, Odisha.

This notice pertains to an alleged deficiency in the dispatch of minerals from the company's Sukinda Chromite Block.

As per a filing with the stock exchange, the demand arises from a revised assessment of average sale prices as determined by the Indian Bureau of Mines.

The mining authorities issued this notice on July 3, citing Rule 12A of the Minerals (Other than Atomic and Hydrocarbon Energy Minerals) Concession Rules, 2016, and have initiated steps to utilize the company’s performance security to recover the owed amount.

In its filing, Tata Steel stated, "On July 3, Tata Steel Limited received a demand letter from the Office of Deputy Director of Mines, Jajpur, regarding the revised assessment of mineral dispatch shortfall from the Sukinda Chromite Block for the fourth year of the Mine Development and Production Agreement (July 23, 2023, to July 22, 2024), allegedly violating Rule 12A of the Minerals Concession Rules, 2016, leading to the appropriation of performance security."

The company further explained that the reassessment is based on the average sale price declared by the Indian Bureau of Mines.

The alleged shortfall in mineral dispatch occurred during the fourth year of Tata Steel’s mining agreement under the Mine Development and Production Agreement (MDPA) for the Sukinda block.

Tata Steel has contested the demand, asserting that the claim lacks justification and a solid foundation, and intends to challenge the notice through legal avenues.

"The Management believes that the State's demands are unfounded and lack substantial basis," the company stated.

"Thus, the company will seek appropriate legal remedies before the relevant judicial or quasi-judicial bodies," it added.

Sukinda, situated in Odisha’s Jajpur district, is recognized as one of the largest chromite reserves in India and is crucial for Tata Steel’s raw material supply.