India: NMDC Hopeful of Resumption of Operations at Donimalai Mines Very Soon

NMDC is certain regarding the renewal of Donimalai mining lease and its early resumption, as per a tweet of Mr Baijendra Kumar, Chairman-cum-Managing Director, NMDC. Also, as per NMDC Chairman, the extension of Donimalai is sub judice in Mine Tribunal and it has stayed all auction-related activities of the Karnataka government. As per the amendments made in Mining and Mineral Development Act by Central government, it is mandatory for state governments to renew public sector mining leases.

As per reports. the Karnataka government is of the view that the new amendment mining law will not be applicable to NMDC, as its lease to mine at Donimalai has already been cancelled. However, NMDC has not received any communication from the Karnataka government on non applicability of recent amendments on extension of mining leases.

What is the case all about ? Iron ore operations are on hold at NMDC's Donimalai mine which was renewed lease on 3rd Nov'18 for the next 20 years. But the State Govt. put the additional condition to pay 80% premium on iron ore sale value from Donimalai to the Karnataka State Govt. NMDC was in negotiation with the Govt of Karnataka over its decision to impose an 80% premium on iron ore sales from Donimalai. As the company's earlier license did not include the premium. NMDC challenged the premium demand in the Karnataka High Court, Subsequently, in August the Karnataka government withdrew the approval for extension of the lease, and decided to auction the iron ore mine as per the Mines and Mineral Regulation (Development) Act.

Govt of Karnataka, decided to cancel the lease renewal order of NMDC's Donimalai mines in Karnataka in an order dated 17 Aug '19 and further put for an auction sale of the expired mine lease block. Following this, NMDC had requested the Government of Karnataka to withdraw its letter stating withdrawal of NMDC Donimalai lease renewal and requested for urgent hearing on the matter by filing revision application.

The hearing was on 21 Aug'19 with due communication to state govt & NMDC. As per reports, nobody from State govt attended the meeting but a letter was received stating that since they could not receive copy of revision application so they could not prepare comments and hence should be given one weeks time to prepare statement of objections. So the authority (Central govt mines tribunal) has put a stay to the order dated 17 Aug until the next date of hearing.

NMDC Donimalai has EC limit of 7 MnT p.a. and produces around 6-6.5 MnT iron ore annually.