The mining ministry has referred the issue to the department of legal affairs due to differences of opinion with the Orissa government.
According to official sources, the department has been asked to clarify if it is permissible to select a late applicant - in this case Posco - without considering the already pending applications for mining licences in a particular area.
The public sector enterprise, Kudremukh Iron Ore Company, had filed a petition in the Orissa High Court against the state government's recommendation for a mining licence to Posco for the Khandadhar iron ore mines.
The licence was previously allotted to the state-owned company. However, the high court quashed the petition and asked the central government to take an appropriate decision within three months.
The Orissa government had asked the Centre to grant mining licence to Posco over an area of 6204 hectares in Sundargarh district.
The Ministry of Mines thinks that the Posco proposal falls under Section 11(2) and Section 11(3) of the Mines and Minerals (Development & Regulation) Act, 1957. Under these sections, the state government can evaluate all the applicants and select the one it deems fit.
However, the Orissa government is of the opinion that Section 11(5) of the Act allows the state government to grant a licence to a late applicant like Posco. The issue has got muddled as both the mining ministry and the Orissa government have cited several court judgments in their favour.
During a recent meeting between Orissa Chief Minister Naveen Patnaik and Prime Minister Manmohan Singh and other high level officials, finance minister P Chidambaram had asked Patnaik to resolve the matter soon.
Official sources said it was decided then that land for Posco should not be acquired forcibly. It was also decided that the state government would soon prepare a proposal for use of forest land for the project and submit it for environmental clearance and approval of the central government.
