Dantewada District Collector Mayank Chaturvedi has imposed a staggering penalty of Rs 1,620.5 crore on the National Mineral Development Corporation (NMDC) for alleged violations of mining regulations.

Announced on August 29, this hefty fine has sparked intense debate, with NMDC vehemently disputing the charges and hinting at escalating the issue to state and central government authorities. This dramatic development underscores the increasing scrutiny and regulatory challenges facing the mining industry in India.

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The controversy began with a report submitted by the Mining Inspector of Dantewada on August 9, highlighting potential violations by NMDC. This led to the issuance of a show-cause notice on August 12, to which NMDC responded with detailed replies on August 13 and 18.

Despite these responses, the district administration remained unconvinced, ultimately leading to the imposition of the fine, which could set a precedent in the regulation of mining operations.

NMDC has been given a 15-day window to remit the amount, failing which the district administration has indicated that more stringent actions may be taken. The penalty has raised concerns within the public sector giant, which argues that the fine is unwarranted and based on a misinterpretation of the regulations.

In its official statement, NMDC contested the penalty, asserting that it operates with valid mining leases and necessary clearances from the Ministry of Environment, Forest and Climate Change (MoEFCC).

The corporation emphasized that it has consistently paid advance royalties in compliance with the Chhattisgarh Mineral (Mining, Transportation, and Storage) Rules, 2009, and has generated e-permits accordingly.

NMDC contended that the alleged transportation of iron ore without a Railway Transit Pass (RTP) does not constitute a violation, as the advance royalties had already been paid. The company also pointed out that the state government regularly verifies these records and has not raised any objections until now.

NMDC further clarified that delays in RTP issuance, which can occur due to the time required to finalize the grades of iron ore, do not result in any financial loss to the state treasury.

This penalty comes in the wake of a landmark Supreme Court ruling on July 25, which upheld the right of state governments to impose royalties on minerals. The ruling, delivered by a nine-judge bench, has been hailed as a significant victory for state governments, particularly those in mineral-rich regions like Chhattisgarh.

The Supreme Court’s decision reaffirmed that state governments have the authority to levy royalties on mineral resources within their territories, a power that could significantly impact the operations of mining companies across India.

The District Collector’s notice accused NMDC of irregularities in its mining leases, claiming violations of the Chhattisgarh Mineral (Mining, Transportation, and Storage) Rules, 2009.

This development has sparked concerns about the broader challenges faced by mining companies operating under increasingly stringent regulatory frameworks.

The outcome of this case could have far-reaching implications, not just for NMDC but for the entire mining sector in India. It could also intensify the ongoing tug-of-war between state rights and central oversight in the regulation of the country’s vast mineral wealth.