Karnataka begins process to auction 51 'C' category mines

State govt has vested all mines with Mysore Minerals Limited, which will conduct auction

The Karnataka government has set in motion the process to auction iron ore mines under Category C as per the direction of the Supreme Court. The government earlier this month issued cancellation orders to 51 mining leases.

The Supreme Court, in its April 18 order, had directed the state government to cancel these mines as they had engaged in large scale illegal mining and ordered for reallotting them to end users like the steel mills.

The combined capacity of all ‘C’ category mines is in the order of 5 million tonnes per annum.

“As directed by the Supreme Court, we have cancelled all 51 mining leases in ‘C’ category. There are a lot of issues to be sorted before we proceed with the reallotment of these mines to end-users. To begin with, we have vested all the mines with the state-owned Mysore Minerals Limited (MML), which will carry out the auction process,” S Shankaranarayana, director, department of mines and geology, government of Karnataka told Business Standard.

He said the department of mines and geology would soon approach the Central government for approval in this regard. Once the approval comes, the department will proceed with the preparation of auction documents, he said and added that there is no timeframe to complete the entire process of auctioning these mines.

However, industry sources feel that the process of reallotting category C mines will take more than one year as it is a first of its kind exercise in the history of Indian mining.

“Till now, we have not seen auctioning of iron ore mines and Karnataka is set to create a precedent. There are no set of procedures for auctioning and the state government is yet to put in place detailed guidelines to do it,” R K Bansal, additional secretary general, Federation of Indian Mineral Industries (FIMI) said.

Tushar Girinath, Secretary, mines, government of Karnataka, had told FIMI annual conference last week that the process of allotting C category mines will take some time as the government was yet to collect penalty from the existing mine owners as directed by the Supreme Court for conducting illegal mining.

The Central Empowered Committee of the Supreme Court had categorised 166 mining leases into A, B and C as per the extent of illegalities committed by them. Category A comprised 45 mines that had negligible or no illegalities. Category B comprised 72 mines where pits were found outside the lease area and 51 Category-C mines operated in more than 15% outside their lease boundaries.

The Apex Court, while allowing 45 A-category mines and 67 B-category mines to resume mining subject to fulfillment of statutory conditions like implementation of reclamation and rehabilitation plans, had directed for cancelling leases of 51 mines in C-category.

It had directed the state government to reallot C-category mines through a transparent process of bidding to the highest bidder from amongst end users. The court also stated that floor price for such auctions would be based on market value, and the ore should be used for captive purposes only. It also restricted export of such ore from C-category mines.

^{* The Central Empowered Committee of the Supreme Court has classified 166 mining leases into A, B and C categories}

* Category A comprised 45 mines that had negligible or no illegalities. Category B comprised 72 mines where pits were found outside the lease area and 51 mines in Category operated in more than 15 per cent outside their lease boundaries

* The Supreme Court had ordered for cancelling C Category mines and ordered state government to auction them through a transparent bidding process

* The state government has cancelled leases of 51 Category C mines through an order on September 13

* These 51 mines together contribute about 5 million metric tons per annum

* Karnataka government has identified state-owned Mysore Minerals Limited to carry out the auction process