K'taka cancels NMDC iron ore lease in Donimalai

The production of iron ore is likely to come down by 7 million tonnes per annum in Karnataka

In what could be a shocking development for the steel sector in Karnataka, the state government has cancelled the extension of mining lease period of public sector NMDC Ltd. DH file photo for representation

In what could be a shocking development for the steel sector in Karnataka, the state government has cancelled the extension of mining lease period of public sector NMDC Ltd.
 
The government had extended the lease for a period of 20 years with effect from November 15, 2018 subject to payment of a premium equivalent to 80% of the average sale price of iron ore published by the Indian Bureau of Mines. However, the company approached the High Court and got the order quashed last month.
 
The court had also permitted the company to resume production at its mines in Donimalai region in Ballari district, which had been shut down for almost a year.
 
According to a government order issued on August 17, (copy accessed by DH) the Secretary to government, MSME & Mines, Commerce & Industries Department stated, "Government hereby withdrawn the approval accorded to extend the mining lease period of NMDC Limited, bearing ML No. 2396 situated in parts of Donimalai Range, Sandur taluk of Ballari district over an extent of 608 hectares for iron ore under the provision of the Section 8A(8) of MMDR Act, 1957, immediately and auction the said block."
 
It is learnt that the state government is going ahead with the e-auction of the iron ore block immediately.
 
The Donimalai range contains an estimated 143 million tonnes of iron ore. The company was producing around 7 million tonnes of ore from this mine annually. During fiscal 2018-19 till November, NMDC had produced around 4 million tonnes of iron ore from Donimalai region.
 
The government's move is likely to impact the production of iron ore in the state. As against the required quantity of 35 million tonnes per annum for the steel industry, the production in the state during the current year is expected to be 31.3 million tonnes. This means the steel industry may have to depend on other states for sourcing the required quantity of iron ore, an industry analyst told DH.
 

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