Stalemate over renewal of NMDC Donimalai mining lease continues

The stalemate over renewal of the Donimalai mining lease in favour of NMDC continues even almost four months after the Central government amended the Mining and Mineral Development Act making it mandatory for state governments to renew public sector mining leases.

The Karnataka government has taken the view that the new amended mining Law will not be applicable to NMDC, as its lease to mine at Donimalai has already been cancelled. The State government has sought the Centre’s opinion in this matter, government sources said.

In response to a BusinessLine questionnaire, Baijendra Kumar, Chairman-cum-Managing Director, NMDC, said it has not received any communication from Karnataka government with regard to the Donimalai mine lease.

As far as NMDC is concerned, the mine should not be put under auction, and as such the Mines Tribunal has stayed all auction-related activities of the Karnataka government, he said.

NMDC has been the leaseholder for Donimalai iron ore mine since 1968. Last November, the Karnataka government issued a letter for extension of the lease for 20 years on the condition that the state-owned company should pay a premium of 80 per cent on the sale value of the mineral, as determined by the Indian Bureau of Mines.

NMDC challenged the premium demand in the Karnataka High Court through a writ petition. In July, the High Court set aside the condition for premium. Subsequently, in August the Karnataka government withdrew the approval for extension of the lease, and decided to auction the iron ore mine as per the Mines and Mineral Regulation (Development) Act.

The company moved the Union Ministry of Mines, which agreed to hear the case if the Karnataka government withdraws the plan to auction the mine, and stayed further proceedings in the case.

In September, the Central government amended the MMRD Act to make it mandatory for all State governments to renew mining leases of public sector companies for a period of 20 years on the expiry of current leases.

“We have been pursuing with Karnataka and Central governments in this matter. As per the decision of Mines Tribunal and as per the Rule 3 (2) of Mineral (Mining by Government Companies) Rules, 2015 the lease should be extended in favour of NMDC,” he said.

NMDC produces about 7 million tonnes from Donimalai iron ore mine and the non-renewal will result in shortage of supply of iron ore to the steel manufacturers in Karnataka, said Kumar.

The development comes at a time when over 200 merchant mines leases are expected to be cancelled in March and put on auction.