ArcelorMittal set to forfeit guarantee; Kesoram mine
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The coal ministry has asked for deducting the bank guarantee of the world's biggest steel producer ArcelorMittal for failing to develop its coal block in Jharkhand. It has also de-allocated the coal mine held by BK Birla group owned Kesoram Industries.
The decision is part of three de-allocation of coal blocks and deduction of four bank guarantees of promoters that were ordered by the inter-ministerial group (IMG).
This IMG has been set up by the government to track the developments made by the private sector companies in using their coal blocks, after the Comptroller and Auditor General's report caused a national political storm pegging potential losses from the allocations at Rs 1.86 lakh crore.
The group under the chairmanship of additional secretary Zohra Chatterji, has been meeting since September 2 to examine how many of the 195 coal blocks should revert back to the government or just let off with a deduction in their bank guarantees. With today's action, the IMG has so far recommended de-allocation of 11 blocks and deduction of bank guarantee in cases of 14 others. A total of 58 mines were given show cause notices for failure to develop blocks within the stipulated timeline. Insiders in Shastri Bhawan say more de-allocations are in the offing and so are deduction in bank guarantees.
LN Mittal-promoted company ArcelorMittal had won the Seregarha coal block in Jharkhand , jointly with a GVK Power promoted entity in January 2008. The companies were served show-cause notice in May this year asking to explain why the allotted block should not be de-allocated as they have defaulted on almost all the stipulated milestones.
The ministry has also decided to accept the recommendations of the IMG to de-allocate the Gondkhari block in Maharashtra allotted jointly to Kesoram Industries, Maharashtra Seamless Ltd. and Dhariwal Infrastructure in 2008. These firms too were show caused in October 2009 on similar grounds.
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