Jamshedpur/Ranchi, July 15: With the high court referring the dispute over Chiria iron ore mines to the central mining tribunal, the state government appears to have lost the initiative it had taken in cancelling the mining lease over three of the 10 blocks of Chiria, granted earlier to Indian Iron & Steel Company (IISCO).

Justice M.Y. Eqbal directed the tribunal to sort out the issue within three months. IISCO, now being merged with SAIL, had approached the high court to protest against the cancellation of the lease.

Chiria mines in West Singhbhum is believed to have a deposit of 1,900 million tonnes of iron ore out of the state?s total iron ore reserve of 3,700 million tonnes. The quality of the iron ore is also believed to be among the finest in the world.

The state government had taken the plea that since IISCO was not using scientific and modern equipment for mining and since it was just sitting over the lease and not mining enough iron ore, the government was losing out on revenue and the state on employment. Moreover, it had not bothered to file for renewal of the lease either. Consequently it had decided against renewing the mining lease.

The dispute is of great interest and significance to the iron & steel industry since many of the fresh investment proposals in the state from this sector are related directly to the ease with which the investors gain access to the iron-ore reserves at Chiria. Mittal Steel, Essar and Jindal Steel have all set their sights on the reserve.

Chief minister Arjun Munda had come under sharp criticism because he apparently favoured the allotment of Chiria iron ore to the new investors. He was stopped in his track by an interim stay order granted by the high court which directed both IISCO and the state government to maintain the status quo.

The state government?s counsel, S. Verma, said the high court had asked the mining tribunal to pass an interim order by August 15. If the tribunal fails to issue an interim order by that date, the high court declared, its own interim stay would be deemed to have been vacated.

The high court order is viewed as yet another setback for the chief minister, who this week had to back-track from his belligerent stand vis-?-vis the Damodar Valley Corporation and capitulate. The state government?s chances before the mining tribunal are viewed as dim by experts.

Even a mines department spokesman said, ?With the case having been shifted to the tribunal, it shall now become increasingly difficult for the state government to win the dispute against IISCO.?

Although the tribunal is an independent body, it is packed by people who have served the union ministry of steel and mines. They are unlikely to appreciate the state government?s point of view and would in all probability favour the public sector steel plant?s plea, the officials apprehended. ?We are a little sceptical about the outcome before the tribunal,? confessed another official.

But the state government counsel said the state government would pursue the case as vigorously before the high court. If the tribunal rules against the state government, he said, the state government would have the option to move an appeal before the high court or the supreme court.