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Twesh Mishra The Centre has intervened in the ongoing dispute between NMDC Ltd and the Karnataka government and the stand-off over the lease extension condition is expected to get resolved in a week, a top government official said.
The need for the Centre’s intervention arose after the Karnataka government imposed an 80 per cent premium on the overall sale price of iron ore from the Donimalai mine as a condition for extending the lease.
The lease for the Donimalai mine was extended in favour of NMDC for another 20 years from November 2, 2018.
Temporary suspension
In a statement to the BSE on November 19, NMDC said that it has temporarily suspended iron ore-mining from the Donimalai mine.
“Since imposition of such a condition (80 per cent premium) is not as per the MMDR (Amendment) Act, 2015, read with the Mineral (Mining by Government Companies) Rules, 2015 and as the same is also not economically viable, NMDC has represented the same before the Chief Minister of Karnataka,” NMDC had said.
A Steel Ministry official told BusinessLine : “Talks are on between the Ministry of Steel, NMDC and the Karnataka government to resolve the issue. A meeting was called at the Ministry of Steel on November 22 in Delhi to discuss various issues related to this impasse.”
According to industry estimates, NMDC will suffer a loss of around ₹944 crore per annum if the 80 per cent additional levy on the 7 million tonne of iron ore mined from Donimalai is upheld.
Action plan discussed
“An action plan is required to be put in place to compensate for the shortfall in iron ore production resulting from the delay in execution of the mining lease in Donimalai. This was also discussed between the Karnataka government and NMDC,” the official said. “It is expected that the issue will be resolved in the coming week.”
News reports earlier this week said that the Karnataka government is in the process of calling for fresh tenders for the Donimalai mines and may go in for auction in case NMDC did not sign a contract agreeing to the 80 per cent premium in the next three weeks.
The move to re-auction the iron-ore mine would be a jolt for NMDC’s operations. As India’s largest iron ore producer, the company produced 35.6 million tonnes in FY18.
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