SC to hear mining industry's plea for discontinuation of e-auction of iron ore

K'taka govt has argued for continuation of the e-auction system

The Supreme Court is set to hear later today the mining industry’s plea for discontinuation of Electronic Auction system for sale of iron ore in Karnataka. The E-auction system, which was introduced in September 2011, was to end on April 12, 2014 as ordered by the Apex Court in April 2012.

The Central Empowered Committee (CEC) of the Supreme Court has already recommended for continuation of the system until the iron ore production reaches 25 million tonne per annum in the state. The production of iron ore in 2013-14 barely touched 19 million tonne and in 2014-15, it is estimated to increase to 22 million tonne only.

It is estimated to touch the 25 million tonne mark in 2015-16 as still a large number of mines are waiting for various statutory approvals to resume mining.

In its order dated April 18, 2013, the Apex court had permitted resumption of mining by Category A and B mines totaling 115, subject to various statutory approvals. Till now, only 25 leases including two from the state-owned NMDC Ltd have become operational.

The Court had also capped iron ore production at 30 million tonne and ordered for closure of 51 mines under ‘C’ Category for large-scale violation of mining rules and causing damage to the environment.

“It is a settled position in law that a purely temporary provision, which because of compelling forces justified differential treatment, cannot be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it post the disappearance of the initial expediency and necessity,” said the Federation of Indian Mineral Industries (FIMI) in its affidavit filed before the Supreme Court.

It said the circumstances, which necessitated the commissioning of a Monitoring Committee are no longer present, with the mining activity in the State of Karnataka having achieved higher thresholds, as a consequence of direct and strict regulation by the Supreme Court. “Given these circumstances, it is humbly submitted that the need to either continue or reconstitute the Monitoring Committee does not arise,” FIMI said.

The FIMI further submitted that the continuous superintendence of the Apex Court has led to the mining activities in the State of Karnataka being conducted under a rigid regulatory framework. “Mining activities in the State are therefore swiftly approaching normalcy and consequently, there may be no need to extend the tenure of the Monitoring Committee. The responsibilities hitherto discharged by the Monitoring Committee could well be discharged and effectively implemented by the Indian Bureau of Mines, Director of Mines and Geology, government of Karnataka and the department of forests among others,” the FIMI said in its affidavit.

In the E-auction system, the sellers cannot sell iron ore except to those registered buyers that are from the State of Karnataka, while buyers are free to buy even from outside the state. This leaves the supervision of the Monitoring Committee with no significance, as clearly, a level-playing field is not being maintained in the sale of iron ore, the FIMI said.

The government of Karnataka, in a separate affidavit filed before the Apex Court, had argued for continuation of the E-auction system. It also pleaded for reconstitution of the Monitoring Committee under the state government to supervise the E-auction system.

The Apex Court will hear both the applications of FIMI and state government apart from the one filed by Karnataka Iron and Steel Manufacturers’ Association later today.