Kudremukh Iron

Ore Company

Limited

1969 -NMDC mining lease

1985- The government of Karnataka declared Kudremukh region as a National Park under the Wildlife (Protection) Act of 1972

July 25,1999 - KIOCL lease expires, temporary work permit granted

1995-2001- Showdown between NGO Wildlife First and KIOCL

Oct 2002 -SC passes its judgment

Question 1

What should the government/KIOCL do with the massive

investments of Rs.3,000 crores that are fixed assets of the

company(building ,offices, various other facilities etc)?

Who is going to bear all of these losses? What would

become of some of the investments recently made? How

does one fix responsibility for these decisions that have

been made in the past, especially since those who took

these decisions of aggressive investment were government

officers and have retired in the recent past ?

• The losses should be shared by both the government and the KIOCL as

permission was taken earlier from the Forest department for these

investments

• The government should help KIOCL in locating to other place for the

mines. It should also help KIOCL in getting necessary minerals from

other mines, so that they can process and can fulfill their commitment

• The recent investments made by the company cannot be recovered. The

option left is to import ore from outside, rather than mining, and transport it

to its pallet plant to manufacture steel

• The upbeat market trend and high steel prices in the domestic as well as

international markets was favorable

• The relocation of the plant will cause all the highly qualified manpower to

opt out of the job. There would be technical difficulties in obtaining the

same quality of iron ore, transportation of iron -ore to the pellet plant

• The company knew that it had an initial mining lease of only 30 years and a

temporary permit thereafter, so it should have taken decisions accordingly.

• Since the decisions of aggressive investment made by the retired government

officials cannot be reverted, the company should have thought this earlier to

have avoided the mistake

• The company in partnership with the government should take initiatives in

the area to make for its losses

Question 2

The company has entered into long term contracts with international buyers

for the supply of iron-ore concentrate and pellets. Not honoring these

commitments would result in payment of heavy penalties. Further ,the

production line of these customers would be affected owing to non-supply of

pellets. Who is answerable to them?

• The company was aware of the initial mining lease of 30 years, so should

have made commitments accordingly

• KIOCL should have used the temporary permit period to fulfill the existing

commitments rather than adding the new ones

• In the next 3 years span, KIOCL should try and complete all the existing

commitments so that it does not affect the production line of the customers

• The government should make necessary arrangements to provide iron ore to

the company so that it can manufacture pellets to fulfil their orders

• But in the long run, violating commitments would create a negative image of

the company and affect its credibility

Question 3

Closure of the company would result in a loss of 12500 jobs and difficult times

for the workers and their families. Who is to be held accountable for their job

losses? What would befall the children who are at the various stages of their

education?

• Since KIOCL is a PSU, the company should provide similar if not

better opportunities to their employees as well as to their family

• The government should try its best to find the ideal location for

mining and give incentives to the current employees to relocate

• The government should provide subsidies to KIOCL for establishing a

new plant in an alternative location

• The government should make efforts in providing financial support to

the new unit. One way to do this can be converting the land to an eco

tourism spot

Question 4Since the mid sixties, successive Governments at the center have been pro-development, aggressively pursuing industrial growth. Ecology and environment are but recent concerns. Establishment of KIOCL ,predates this period. Why are we judging yesterday with today’s standard? Is environment such an overpowering issue that government can give a go-by to massive public investments and loose one of its star companies? If environment is so important, why should KIOCL alone pay such a heavy price for the protection of environment and not the private mines, some of which are causing massive devastation in various parts of the country?

• Irrespective of the time the contention is brought forth, the damage to the

environment should be mitigated in whatever way possible

• Government plays the role of a regulator and it needs to make sure that there is a

balance created in the economic, social and ecological spheres

• It has capacity to bare economical loss in order to save the environment

• Since KIOCL is a public sector undertaking its ownership lies with the government.

It lacks the financial and political backing which the private mines enjoy. Due to

which KIOCL was singled out

Prepared by :-1. Tarini2. Soochna3. Shubham4. Abhishek5. Mudita6. Vishal7. Jaskirat