Alleged Mineral Shortfall: Why Is Tata Steel Facing a Rs 1,902 Crore Demand?

Tata Steel on Friday said that it is facing a demand notice worth Rs 1,902 crore from the Deputy Director of Mines in Jajpur for alleged shortfall in dispatch of minerals, the company said in a stock exchange filing.

What Is The Alleged Mineral Shortfall?

There is an alleged shortfall in the dispatch of minerals from Tata Steel's Sukinda Chromite Block in Odisha and this is the reason that the company has received a demand notice from the Deputy Director of Mines in Jajpur.

The steel-maker said in the exchange filing that it will pursue legal remedies before the appropriate judicial or quasi-judicial forums.

"The Management believes that the State's demands lack justification and substantive basis. Accordingly, the Company will pursue suitable legal remedies before the appropriate judicial or quasi-judicial forum(s)," the company said in a statement.

The company further said that this disclosure  is being made in compliance with Regulations 30 and 51 of the of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

What Does The Demand Notice Say?

The demand notice which was received on July 3, says that there is alleged violation of Rule 12A of the Minerals (Other than Atomic and Hydrocarbon Energy Minerals) Concession Rules, 2016, and consequent appropriation of performance security, the company said.

"The alleged shortfall in mineral dispatch by the company as per the aforementioned Mine Development and Production Agreement for Sukinda Chromite Block has resulted in an aggregate demand of Rs 19,02,72,53,760 including sale value of shortfall quantity and appropriation of performance security," it said.

According to the notice, the revision in assessment is based on declaration of average sale price notified by the India Bureau of Mines.

The state's demands lack justification and substantive basis and the company will pursue suitable legal remedies, it added.

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