Tata Steel Faces ₹1,902 Cr Demand Over Sukinda Dispatch Shortfall, Vows Legal Fight

Tata Steel Ltd has landed in the regulatory spotlight after receiving a ₹1,902.72 crore demand notice from Odisha’s mining authorities for an alleged shortfall in mineral dispatch from its Sukinda Chromite Block. The demand, issued by the Deputy Director of Mines, Jajpur, is based on a revised assessment under Rule 12A of the Minerals (Other than Atomic and Hydrocarbon Energy Minerals) Concession Rules, 2016.

 

Key Highlights:

 

- Revised Demand: The notice pertains to the fourth year of Tata Steel’s mining agreement (July 2023–July 2024), citing a shortfall in dispatch volumes versus the Mine Development and Production Agreement (MDPA).

 

- Valuation Basis: The ₹1,902.72 crore figure is derived from the average sale price declared by the Indian Bureau of Mines, triggering a recalculation of royalty and performance obligations.

 

- Performance Security at Risk: Authorities have moved to appropriate Tata Steel’s performance security, escalating the dispute’s financial implications.

 

- Company’s Response: Tata Steel has strongly contested the claim, stating it “lacks justification and substantive basis.” The company plans to pursue suitable legal remedies before appropriate judicial or quasi-judicial forums.

 

- Operational Context: The Sukinda mine, one of India’s largest chromite reserves, was acquired by Tata Steel’s subsidiary TS Alloys at a 93.75% revenue share premium in 2020. It has since been merged into Tata Steel Ltd.

 

- Market Impact: While the stock dipped slightly post-announcement, analysts believe the legal route could delay any immediate financial hit.

 

This high-stakes standoff could set a precedent for how mineral dispatch obligations are interpreted under India’s evolving mining framework.

 

Source: Economic Times, Business Standard, Tata Steel Exchange Filing