The government on Wednesday said it would not tolerate any “back door” entries by industry for seeking mines, a move that could dampen corporate efforts of forging alliances with PSUs for their mining projects.

Asked about the industrial controversies relating to mining activities like that in Orissa, Mines Minister B.K. Handique said that mining lease was given to a State PSU and not the corporate giant Vedanta Resources.

“In the name of PSUs, no more back door entry will be allowed. Yes, they (private companies) have made back door entries,” Mr. Handique told reporters on the sidelines of FIMI’s 44th Annual General Meeting here.

Sources in the ministry said that the new mining bill will not allow such indirect route adopted by private firms to pursue mining projects by joining hands with State mineral companies.

“We are not against joint ventures. But if the mining lease is given to PSUs it should be utilised by PSUs. In the new Act, we will plug the existing legislative loophole to ensure this,” a senior Mines Ministry official said.

The Mines Ministry is working to bring in transparency in the sector through a new legislation which is likely to be presented in the Winter Session of Parliament.

Many state PSUs have tied up with private firms forming projects including Orissa Mineral Corporation (OMC) and Mysore Mineral Ltd. (MML).

While OMC has inked pact with Vedanta Group firm, MML has entered an agreement with JSW Steel Ltd. for mining. Andhra Pradesh Mineral Development Corporation has also tied up with JSW Group for bauxite mining at Araku region.

OMC holds bauxite mining lease at ecologically sensitive Niyamgiri hills in Orissa while MML has got the rights to mine iron ore in Thimmappangudi Mine in Karnataka.

Meanwhile apex miners’ body FIMI had blamed State PSUs for taking advantage of private firms under the joint venture mining route.

Billionaire Anil Agarwal-led Vedanta Group was refused green clearances for its proposed mining project at Niyamgiri hills in Orissa for which it had tied up with OMC.

Vedanta Resources flagship firm Sterlite Industries had entered into a pact with OMC in 2004 for bauxite mining to feed its aluminium project in Orissa.

“In 2004, it (mining lease for Niyamgiri) was given to OMC, so through back door entry they have done it. Whichever route you take that must be correct. We have not given approval to Vedanta. We approved it for OMC,” Mr. Handique said.

“Definitely I do agree, Environment Ministry should be staying it, otherwise there will be a disaster,” Mr. Handique said.

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