Karnataka govt cancels NMDC’s Donimalai mine lease, to launch auction

In a setback to NMDC, the Karnataka government has cancelled its lease for the Donimalai iron ore mine.

This will mean taking a production impairment of about 6 million tonnes per annum for state-owned NMDC.

The company has filed a revision application against the Karnataka government with the Union Ministry of Mines, and the hearing has been scheduled for August 21.

The Karnataka government had initially renewed the mining lease for 20 years but later decided against it. Following this, NMDC approached the courts, which ruled in its favour.

NMDC recently informed the exchanges that it had secured a court order in its favour and that the mine would add to its production subject to Karnataka completing the formalities of signing the contact renewal.

However, the Karnataka government, in its letter dated August 17, communicated that it had withdrawn the approval accorded through a letter dated November 2, 2018. It further said it plans to auction the mine instead. NMDC has now requested the Karnataka government to withdraw its letter cancelling the lease.

Central intervention

Sources said the PSU may also seek the Centre’s intervention in seeking an extension of the mining lease which will significantly add to its annual output. The Centre is likely to approach the State government, asking it to keep its order in abeyance.

NMDC shares took a hit on Tuesday, falling 11.49 per cent to close at ₹90.15 on the BSE.