India: Resumption at NMDC Donimalai iron ore mine awaits forest clearance - sources

Iron ore from NMDC's Donimalai mine may not be available till the end of the month or first week of Jan by when the miner hopes to get a forest clearance and a new mining plan approved.

As SteelMint reported, the Centre's order authorising special terms for Donimalai has cleared the way for mining to resume two years after its lease expired. The Karnataka government has responded by issuing an order, dated 1 Dec'20, permitting NMDC to commence mining with immediate effect conditional to it paying the state government 22.5 per cent premium in addition to other applicable taxes and royalty and subject to the availability of necessary statutory clearances.

Sources told SteelMint that a forest clearance was applied for when NMDC was seeking a renewal in 2018. How soon it got a FC and the validity of the EC would depend on the date of renewal, said an official speaking on condition of anonymity.

Clearances for NMDC's Chhattisgarh leases came swiftly for example because of there being no significant gap between lease terms.

Experts point out the 2015 Act centred around "transparent" allocation of grants - which the Narendra Modi government decided could only be achieved through auctions - to whichever party promised the state the highest premium per tonne. Consequently there now exists two unequal regimes: one in which pre-2015 leases and state PSUS operate without having to pay a premium and one under which the state government earns a huge additional sum.

NMDC's problems began when the state government in Karnataka decided it did not want to forego auction revenues to back the Central government PSUs rights under the Act to a premium-free grant. In August, both governments agreed that a committee would finalise in three months how PSUs could compensate states in similar situations. Instead, it has taken the Mines Ministry three months to issue a specific order authorising the temporary and special terms for Donimalai agreed to in August.