After state govt's levy, NMDC suspends iron ore-mining in Karnataka

NMDC Limited has suspended iron ore-mining from its Donimalai mine in Karnataka following the decision of the State government to impose 80 per cent premium on the iron ore sales from the mine, according to a regulatory filing by the public sector undertaking.

The mining company said it has requested the government to reconsider its decision and the Karnataka Chief Minister Kumaraswamy had convened a meeting with senior officials on November 14.

"In response to our representation, the Chief Minister had convened the urgent high-level meeting on November 14 in Bengaluru and directed all the concerned to re-look into the representation given by us regarding the legal and other issues raised," the company said.

The meeting ended on a positive note and there was information that the Karnataka cabinet has not taken any decision to cancel the lease of Donimalai to NMDC, it said.

Pending the decision on representation by the Karnataka government, production has been temporarily suspended, the NMDC said.

Sources said if the Karnataka government decided to stick to the 80 per cent premium, NMDC would be losing Rs 1,348 per tonne and may result in a loss of Rs 9.44 billion per annum as it mines about seven million tonnes of iron ore per annum from Donimalai.

The lease of Donimalai mine has already been extended by the Karnataka government with effect from November 4 for 20 years, NMDC said.

The Karnataka cabinet has approved the mining lease of Donimalai till November 2038, on payment of 80 per cent of the average sale value as published by Indian Bureau of Mines, the NMDC said.

"Since imposition of such conditions is not according to the MMDR (Amendment) Act, 2015 read with Mineral (Mining by Government Companies) Rules, 2015 and as it is also not economically viable, we have raised the issue with the Karnataka Chief Minister," the NMDC said.