Panel urges SC not to ask NMDC, MML to meet iron ore shortfall in Karnataka

Topics NMDC | Iron Ore | Supreme Court

Production of iron ore in Karnataka will be about 35.726 MMT during 2020-21
The Supreme Court-appointed Central Empowered Committee (CEC) has asked the Apex Court to reject Karnataka Iron and Steel Manufacturers Association (KISMA's) appeal urging the Supreme Court to direct NMDC and Mysore Minerals Ltd (MML) to meet a shortfall of 7 million metric tonne (MMT) of iron ore ore. KISMA claimed the shortfall arose due to the suspension of mining operations by NMDC. 

CEC said that the maximum permissible annual production (MPAP) of existing mines, upcoming nining assets and four applications that are under its consideration will be able to meet the demand.

KISMA had stated in a petition that the shortfall of seven million metric tonne (MMT) resulting from the suspension of mining operations by NMDC at Donimalai may be met jointly by the company's Kumaraswamy mine to the extent of four million metric tonnes (MMT) and by Myore Minerals to the extent of three MMT a year.

The present status of maximum permissible annual production (MPAP) of iron ore from 16 category-A mines, 14 Category-B mines and seven auctioned category-C mines in Bellary, Chitradura and Tumkur stands at 37 million tonnes. This figure has been arrived at after considering the expiry of eleven category-A and B mining leases on March 31, 2020 and after commencement of production in auctioned mines. In comparison the approved MPAP is lower at 32.986 MMT, while the demand in Karnataka is estimated at 30 million tonnes a year.

In addition, one more Category 'C' mine auctioned by the Karnataka Government is ready for operation with an approved MPAP of 0.31 MMT. Further, the State has auctioned four out of the 11 expired mining leases. These four mining leases with a MPAP of 2.43 MMT are also ready to commence operation at the earliest.

Production of iron ore in Karnataka will be about 35.726 MMT during 2020-21. Further, four applications are under CEC's consideration for enhancement of the MPAP, the panel in a report submitted on Wednesday.

Keeping in view these facts the CEC has reiterated the recommendation made in its report in May 2019 and asked the Court to reject KISMA's prayer.

Basant Poddar, former Chairman and current member of FIMI South said that if export restrictions imposed by the Supreme Court only on Karnataka are removed, benefits will accrue to the State by way of increased royalty, premium on auctioned mines and DMF. The apex court had introduced these curbs in 2011, citing war-like situation. Under the restrictions, Karnataka was not allowed to sell the iron ore it produced outside its borders.

Poddar said the removal of the limitations would also contribute to better utilisation of railway infrastructure and Ports, directly benefiting the country's economy.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel