The controversial State-owned mining company, Mysore Minerals Limited, is again in the dock as the Comptroller and Auditor General (CAG) states that it allowed a private company, with whom it has a joint venture, to mine and sell raw ore without financial consideration for the same. Result: A loss of Rs 220.33 crore.
Tungabhadra Minerals Private Limited (TMPL), a joint venture of MML and V M Salgaocar Brothers Private Limited (VMSB), Goa, was set up in 1970-71 to extract iron ore from Sandur in Bellary district. As per the original agreement, the mines were to be utilised for supplying iron ore to a pelletisation plant/sponge plant, which will be set up by the TMPL.
However, after much dilly-dallying, the TMPL agreed to set up a High-Density Aggregate (HDA) plant, for which 70 per cent of the iron ore was to be supplied from the MML captive mines.
Lease expired in 1985
The lease of the five iron ore mines, which was initially transferred by MML to the TMPL, expired on 1985. Subsequently, even the HDA plant stopped functioning in 2002. But the lease and the agreement with the TMPL were not cancelled.
Between 2002-03 and 2011-12, the TMPL mined and sold 84.43 lakh tonnes of iron ore worth Rs 1629.71 crore. The TMPL, which has VMSB as one of its parent companies, received a dividend of Rs 76.57 crore for the same period.
A sub-committee of the board of directors, appointed in December 2004, recommended that the five mines which had been transferred to the TMPL, should be divested by the MML or to use the same mines to extract iron ore independently.
However, the MML did not abide by these recommendations, causing a loss of Rs 220.33 crore.
Coal loss
The CAG report has pulled up the Karnataka Power Corporation Limited for accepting lower grade coal from EMTA, a private company which was given the sub-lease to mine coal for them, and causing a loss of Rs 187.87 crore over a five-year period.
The company also failed to get supplies from the same company for their second unit of the Bellary Thermal Power Station (BTPS) from the captive mines and procured coal from other sources, resulting in an additional loss of Rs 185.37 crore.