Ministry of Mines stays cancellation of NMDC lease for Donimalai mine in Karnataka

The Ministry of Mines has put an interim stay on Karnataka government’s decision to cancel the lease given to NMDC (National Mineral Development Corporation) for the Donimalai iron ore mine, till the next date of hearing, Business Standard reports. On August 17, Karnataka government had decided to cancel the lease and put the mine under auction.

NMDC had approached the revisionary authority of the ministry with a revision application and had sought for an urgent hearing of the matter. During the hearing on Wednesday, the state government sought a week’s time to prepare its response, alleging that it was yet to receive a copy of the revision application. However, NMDC said it had submitted the application in both Commerce & Industries and Mining & Geology departments.

The company alleged that on November 2, 2018, the state government issued a letter for extension of the mining lease for 20 years and subsequently on November 15, 2018, a corrigendum to the letter was issued. The State government, through a letter on November 23, 2018, asked the company to execute the lease extension deed. The letter dated November 2, 2018 contained a condition of payment of premium of 80 per cent of the sale value of the mineral for extension of the lease.

NMDC challenged the condition before the high court of Karnataka. The company argued that the state government’s order was in violation of the judgement of the court, which had earlier set aside the condition of levy of premium equivalent to 80 per cent of the average sale value of the mineral.

The company had requested for a stay on the order.

Iron ore deposits in the Donimali mine are estimated at 143 million tonnes worth around Rs 40,000 crore. NMDC had leased the mine in 1968 for a period of 50 years. The lease expired on November 3, 2018.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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