India: NMDC's Donimalai Mine Iron Ore Operations on Hold Amid Levy Dispute

According to sources reports, iron ore operations are still on hold at NMDC's Donimalai mine which was recently renewed lease. On 3rd Nov'18 NMDC lease got expired and was later renewed for the next 20 years.

State govt has asked NMDC to pay 80% premium on iron ore sale value from Donimalai to the Karnataka state Govt. NMDC India's biggest iron ore mine has been on the 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, as per reports.

"We have got very good premium in the recently concluded iron ore mine block auction and blocks fetched good premium, therefore, we have fixed the weighted average rate of 80% for the renewal of lease to NMDC Donimalai. State may incur huge losses if the premium has not imposed. So the discussions are still on - Mr. Rajendra Kataria (Secretary Mines and MSME, Karnataka) shared in one of the reports"

Department of Mines, Govt. of Karnataka has recently concluded five 'C' category iron ore blocks Phase III in Oct'18. Mines were auction on the premium: - Sri H.G.Rangangouda block fetched final price offer of 129.9%, Kanhaiyalal Dudheria - 111%, Mysore Minerals Ltd 95.2 %, Nidhi mining 59.5% and Bharat mines and minerals 55.5%.

One of the South India based private iron ore miner shared with SteelMint that mining operations of NMDC Donimalali is currently on halt owing to this dispute.

NMDC (National Mineral Development Corporation) is India's largest iron ore miner with annual production of around 35.5 MnT p.a. in FY18. Out of this, 12 MnT was produced from NMDC's mine in Karnataka, combining from Donimalai and Kumaraswamy.
NMDC Donimalai has EC limit of 7 MnT p.a. and produces around 6-6.5 MnT iron ore annually.

Karnataka produces around 30 MnT iron ore annually.