Mahanadi Coalfields, a Coal India arm, is staring at a Rs. 22,000 crore penalty in the face after the Supreme Court said that all mineral production carried out in violation of environmental laws is illegal. The Court has ordered the Odisha government to recover the value of all minerals produced illegally, or in excess of caps under environment, forest laws, pollution control rules and mining plans.

Overproduction by Mahanadi Coalfields in Odisha is the cause for the penalty. The share price for CIL has been falling since the news.

Issues of overproduction, pollution and quality of coal have been plaguing Coal India over the last several months. The company's coal on average, contains 45% ash, far in excess of the 25-30% that is ideal for efficiently burning fuel in thermal power stations. CIL has largely failed to invest in coal washing and similar techniques needed for cleaner coal burning. 

The total compensation to be forked out by mining companies including Tata Steel and GMR in Odisha could well go beyond Rs 50,000 crore according to estimates. Tata Steel's chromite mining in Odisha also attracted popular anger, due to the pollution in the region, and Odisha's Sukinda valley was in the past identified as the fourth most polluted place in the world due to contamination of its soil and water from chromite mining.