Odisha Govt Issues ₹2,410 Crore Demand to Tata Steel Over Chrome Ore Dispatch Shortfall

Company plans to challenge the order; cites ongoing High Court stay on similar demand from last year

Bhubaneswar : In a major development, the Odisha government has raised a demand of ₹2,410.89 crore against Tata Steel Ltd over an alleged shortfall in chrome ore dispatch from its Sukinda Chromite Block in Jajpur district for the fifth year of operations, covering the period from July 23, 2024, to July 22, 2025.

The notice, issued by the Office of the Deputy Director of Mines, Jajpur, invokes Rule 12A of the Minerals Concession Rules, 2016, which deals with obligations under the Mine Development and Production Agreement (MDPA). The demand amount includes both the assessed value of the shortfall quantity of ore and the appropriation of the company’s performance security.

In an official filing to the stock exchanges, Tata Steel confirmed receipt of the demand letter and stated its intention to pursue “appropriate legal remedies” before the competent judicial or quasi-judicial forums.

“The company has received a demand from the Office of the Deputy Director of Mines, Jajpur, amounting to ₹2,410.89 crore on account of an alleged shortfall in chrome ore dispatch from the Sukinda Chromite Block for the fifth year of operations,” the filing said. “The company intends to take appropriate legal steps to protect its interests,” it added.

The Sukinda Chromite Block, one of the largest chrome ore deposits in the country, is crucial for Tata Steel’s ferroalloy and stainless-steel raw material supply chain. The mine operates under a long-term MDPA that outlines production and dispatch obligations to ensure resource utilization as per state guidelines.

This is not the first time Tata Steel has faced such a demand. A similar order amounting to ₹1,902.73 crore was issued for the fourth operational year, which the company had already challenged before the Orissa High Court earlier this year.

On August 14, 2025, the High Court granted Tata Steel interim relief by staying any coercive action by the state authorities. The stay was subsequently extended on September 2, 2025, and remains valid until the next hearing.

“The earlier demand for the fourth year is sub judice, and interim protection continues,” the company clarified, implying that it expects to follow a similar legal path in response to the latest order.

The dispute centers around alleged shortfalls in ore dispatch compared to the commitments outlined in the MDPA. Under Rule 12A of the Minerals Concession Rules, a lessee must ensure that mineral production and dispatch levels align with approved mining plans. Failure to meet these targets can attract penalties, including recovery of the notional value of the shortfall and forfeiture of performance security.

However, industry experts note that fluctuations in demand, logistics, and environmental clearances often affect dispatch levels, making such cases complex. “Many mining companies face challenges in meeting dispatch obligations due to factors beyond their control, such as market conditions and operational constraints,” said a senior mining industry analyst.

Odisha, India’s mineral heartland, has tightened enforcement of mining rules over the past few years following landmark Supreme Court judgments on illegal mining and revenue recovery. Chrome ore, a key input for stainless steel and alloy production, is among the most regulated minerals in the state due to its economic and strategic importance.

The Sukinda valley in Jajpur district accounts for over 90 percent of India’s chromite reserves, making the region critical for the country’s metallurgical sector. Tata Steel’s operations there are viewed as a benchmark for responsible mining and environmental compliance.

While the state government’s demand reflects its firm stance on compliance under mining laws, Tata Steel’s decision to seek legal recourse indicates another extended phase of litigation in Odisha’s mining sector. The outcome of the ongoing High Court proceedings on the previous year’s demand may set a precedent for how such disputes are resolved in the future.

For now, the ₹2,410.89 crore demand adds another layer of regulatory and financial complexity for Tata Steel, even as it continues to expand its production footprint across Odisha.