KOLKATA: The mines tribunal’s order clamping a stay on the recent Karnataka government decision to withdraw approval for extension of mining lease of NMDC Limited’s 7 million tonne Donimalai iron ore mine and put it up for auction is likely to provide the state-run miner a temporary reprieve.

The order prohibits the state government from taking any action on the mining lease and initiate auction of the ore-rich Donimalai mine till the next hearing. The NMDC’s top brass, however, is keen to utilise the time available to pursue a dialogue with the state government.

In the past few days, for the first time since the impasse began in November 2018, the company has managed to initiate talks at the highest level in the state government. NMDC chairman and some of the company’s senior executives met Karnataka chief minister and explained their side of the story to him. “We are highly hopeful after our meeting with the CM,” NMDC’s director (finance) Amitava Mukherjee told ET on Thursday.

Earlier this week, NMDC had approached the Union mines ministry against the Karnataka government’s decision which was communicated to it on August 17. While withdrawing the approval for renewal of lease of Donimalai mine, the letter, a copy of which was seen by ET, said the mine will be put up for e-auction on August 20.

The state-run miner has been engaged in a confrontation with the Karnataka government since November 2018, when the latter had approved renewal of the lease of Donimalai for 20 years, subject to payment of 80% premium on average sale value. NMDC did not agree with the penalty and filed a petition with Karnataka High Court on the issue.

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The court, in an order on July 10, revoked the 80% premium imposed by the state government.

The bench also said, “We hasten to add that we express no opinion on the legal sustainability of the option (to cancel the lease and auction the mine.) Donimalai mine accounts for 16-17% of NMDC’s output and it has affected production and despatch of ore at the country’s largest mining company.

Following the order, the company had initiated talks with contractors for resuming operations at the mine, said a senior NMDC official. “The state government notification on August 17 thus came as a big surprise for us. We thought the HC order was clear – the extension of the mine was not revoked, only the 80% premium part was revoked,” said Mukherjee.

“We believe we have a strong legal provision and it is imperative on the state government to do it (renewal of mining lease),” said Mukherjee. “The support from the Union steel and mines ministries has also encouraged us.”

NMDC has a strong precedent in this case, that of renewal of its most lucrative reserve, Deposit 11 at Bailadila. The Chhattisgarh government renewed the lease of the 12 million tonne mine in 2017 for 20 years till 2037 under the same Mining Act.



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