JSW Steel Renounces Coal and Iron Ore Mines, Incurs ₹445 Crore Write-Off

India’s largest steel maker, JSW Steel, announced a significant financial adjustment Thursday by writing off ₹445 crore to surrender coal and iron ore mining leases. The company had conducted in-depth feasibility studies on its mining assets and found that some projects were no longer viable.

Consequently, the Ministry of Coal terminated the coal block during the quarter, leading to a ₹103 crore charge in the December quarter, covering bid security forfeiture and related expenses.

In addition to the coal block, JSW Steel has also opted to surrender the Jajang iron ore mine in Odisha. The company cited high operational costs as the primary reason for this move. Following approval of its Final Mine Closure Plan by the Indian Bureau of Mines in October, JSW Steel recognized a ₹342 crore provision. This amount pertains to asset write-offs, inventory valuation, and site restoration liabilities associated with the Jajang mine.

This surrender comes after aggressive bidding in 2020, when JSW Steel won the rights to the Jajang block in Keonjhar district, offering a 110% premium on the sale value of the mined ore. However, rising costs have prompted a reevaluation of the project’s feasibility. The mine had an estimated reserve of 39.42 million tonnes of ore and was previously operated by Rungta Mines.

The company’s decision also highlights the growing concerns over the increasing operational costs and levies imposed by state governments. In Chhattisgarh, coal companies face a ₹5 per tonne tax on mined coal, while Odisha’s Orised Act allows a levy of up to 20% on mineral-bearing land. Despite judicial hurdles, the Supreme Court confirmed the state’s authority to collect taxes and retrospectively imposed it in 2005.

The move by JSW Steel shows the changing scenario in the mining sector as the volatile nature of costs and regulatory pressures is compelling companies to reevaluate their strategies.