Suggestions of Supreme Court panel bring relief to Karnataka mines

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The Supreme Court-appointed Monitoring Committee has recommended the apex court to allow export of an equal amount iron ore fines that were imported into Karnataka in 2018-2019. Miners in the state are relieved by the recommendation as it will help bring down inventory levels and improve realisations.

Iron ore mines in the state are stuck with inventory of 6.5 million tonnes (mt), which is equivalent to the 6.67 mt import in the state in FY19. The recommendation is significant, given the ore mines are not allowed to sell outside the state.

In its report, a copy of which is available with Business Standard, the Monitoring Committee said it was of the view that a certain quantity of iron ore fines (of all grades) equivalent to the imported quantity during that year (from outside the country as well as other states), as well as equivalent to the quantity produced from C-Category mines, may be allowed for export through e-auction. Category-C mines produced 1.87 mt in the last fiscal.

The ore, likely to be exported, shall have to go through the process of e-auction, with additional modalities to be approved by the apex court, said the report.

Basant Poddar, former Chairman of FIMI (South), said the report of the monitoring committee was based on ground realities. Permitting exports will further assist in realising the true value of iron ore. We appreciate the report as it factors in the existing situation and paves the way for a level-playing field.

Another miner from the state said, "The recommendations appear well-intended and the practicality has to be seen. A level-playing field can be created only by ensuring there is no arbitrary interference in market forces, and that the market is left independent so as to find the equilibrium.” 

Meanwhile, the committee suggested that modalities for selling outside Karnataka may include conditions such as no lessee/lease holder to sell iron ore directly to the exporters, allowing export of old stock that could not be sold after four attempts by e-auction, with the same modalities with conditions. The quantity to be allowed for export (equivalent to import and production of C-category mines) should be distributed proportionately among the lessees who prefer their unsold ore to be exported.

By end of FY20, about six mining leases will stop mining on account of expiry of their lease periods, under the amended MM(D&R) Act, 2015. The MPAL (Maximum Permissible Annual Limit) for the sale leases is about 2.66 MMT. Iron ore equivalent to this quantity may not be available from April 2020, till the said expired mining leases are auctioned and production commissioned. However, there is a likelihood of resumption of about seven mines, of A&B category, with around 1.528 MMT (million metric tonne) of MPAP (Maximum Permissible Annual Production).

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