Funds crunch may retard move to undo mining damage

Funds crunch may retard move to undo mining damage

Delay in auctioning mines may deprive SPV of Rs 12K cr it expects

Funds crunch may retard move to undo mining damage

The State Cabinet has taken the first step towards restoring the mining ravaged districts of Bellary, Chitradurga and Tumkur by forming a Special Purpose Vehicle (SPV). 

But, it appears that the SPV may face a tough time in securing funds due to delays in auctioning the 51 ‘C’ category mines. The SPV has been named as the Karnataka Mining Environment Restoration Corporation (KMERC).

An initial estimate suggests that the State government can redirect Rs 12,000 crore to the KMERC, from the sale of iron ore extracted from ‘C’ category mines. The amount is 10 per cent of the proceeds from the sale of iron ore.

It will be used for KMERC’s activities like afforestation and infrastructure projects in the three districts. However, sources in the mines and geology department said there will be considerable delay in auctioning ‘C’ category mines due to constraints in identifying the available ore.

The Mineral Exploration Corporation (MEC), the formation of which was also approved on Friday by the Cabinet, to study and estimate the available iron ore in the ‘C’ category mines will have its task cut out. 

While it has been authorised to conduct studies, government officials state that Karnataka does not have the requisite technology for the purpose. 

The State is likely to seek the help of the National Aluminium Corporation Limited (NACL) for identifying the depth of ‘C’ category mines and available ore resources. It is said that MEC will utilise NACL’s technology to identify the depth of Bauxite reserves, for assessing ore reserves in ‘C’ category mines. Officials state that it will take no less than nine months for the entire process to be completed, before it can even start the process of inviting tenders to bid for ‘C’ category mining leases.

Sources state even after all this, there are chances that the ore availability is less than anticipated for KMERC to garner Rs 12,000 crore from the sales. It is said that 70 per cent of the iron ore has been exhausted in Bellary alone due to extensive mining.