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Illegal Mining: NMDC eyes opportunity in Karnataka's 'illegal' ore mines

The country's largest iron ore producer NMDC is eying a major opportunity in the 'illegal' mines.

, ET Bureau|
Feb 27, 2012, 01.35 AM IST
Illegal Mining: NMDC eyes opportunity in Karnataka's 'illegal' ore mines
HYDERABAD: With India's apex court set to announce its final verdict anytime on the fate of illegal iron ore mines in Karnataka, the country's largest iron ore producer NMDC is eying a major opportunity in the 'illegal' mines.

The Supreme Court's panel for forest issues, The Central Empowered Committee, submitted its final report on illegal mining in the three main iron ore districts of Karnataka - Bellary, Chitradurga and Tumkur - on February 4.

Dividing the lease owners into three broad categories, based on the extent of their compliance the CEC recommended that 49 leases (falling under category C) where excessive illegalities were found be revoked. It suggested that these leases then be put up for auction.

"We see an opportunity in the category C mines where mining leases will be cancelled and awarded afresh," said NMDC's CMD NK Nanda. "We have asked our teams to look into these 49 leases under category C as to how they are spread and the reserves available in these mines to assess the opportunity available," Nanda told ET.

The Supreme Court's forest bench has granted the miners two weeks time to prepare their defence before it takes a call on whether the leases can be revoked and is to take up the matter again this Friday.

The CEC has prescribed that mining can resume after reclamation and rehabilitation programme, based on ecological impact assessment report of the Indian Council of Forestry Research and Education (ICFRE), has begun.

While the CEC has recommended that 45 leases, with minimal or no violations, be allowed to resume mining after fulfilling certain conditions, a penalty had been suggested for the remaining 72 leases. Depending on the nature of violation, a penalty of 5 crore per hectare or 1 crore per hectare of operation outside lease boundary is to be levied.

NMDC, which was made responsible for providing a million tonnes of iron ore to the sponge iron and steelmakers of the state, has a mine that falls in the last category. While waiting for the court to take a view on its committee's report, NMDC is exploring the hidden opportunity.

Nanda said NMDC would be interested in bidding for these leases only if there are iron ore reserves of at least 100 million tonnes at one location. "It doesn't make sense for us to bid for smaller mines spread over smaller areas," he said.

The CEC has recommended to the Supreme Court in its final report that the fresh allotments or assignments of mining leases should be done only at 'market value' without any artificial subsidies, and preferably to steelmakers.

NMDC is setting up a 3 million tonnes steel plant in the state in partnership with a Russian firm Severstal on a fast-track basis. If the CEC's recommendations on freezing fresh allocations are accepted, other steelmakers with plans in the state will also be queuing up alongside NMDC.

ArcelorMital, which after many years of trying only managed to acquire land in Karnataka, as well as Posco which is yet to do so, have both indicated their openness to the idea of competitive bidding of captive resources. But the advantage of such a captive supply at market rates of iron ore has to be measured against the quality and reserves still available in the iron ore blocks and the cost of operating the mine.

Close on the heels of the Supreme Court judgement on telecom spectrum that said all exhaustible natural resources be distributed in a fair and transparent manner, the CEC said though the laws governing mining sector don't prescribe any auction process, no law prevents such an allotment method.
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