Karnataka wants more time to auction C-category mines

JSW Steel, Kalyani Steel and others waiting for auction of mines

The Karnataka government will seek extension of the deadline for auctioning of C-category iron ore mines.

Earlier, in February this year, the Supreme Court had set the deadline of six months (before August 24) for the state government to complete the auction of C-category mines. There are 51 mines in the category and the state government has already cancelled the leases following the court’s direction in April last year.

“The Supreme Court’s deadline to complete the process of auctioning these C-category mines expires on August 24. However, we are going to file a fresh affidavit very soon and request the court to give us more time or pass a suitable direction,” said Tushar Girinath, secretary, mines, Karnataka government.

FINGERS CROSSED

• In February this year, the Supreme Court (SC) had set a deadline of six months (before August 24) for the state govt to complete the auction of C-category mines
   
• The state govt has mandated MECL to study the reserves left in the top 15 mining leases in C-category
   
• According to industry estimates, the 51 C-Category mines in the state  could produce about 5-6 mn tonnes of iron ore per annum
   
• SC has capped the production of iron ore at 30 mn tonnes per annum in Karnataka as against the steel industry’s annual requirement of 35-50 mn tonnes

End users like JSW Steel, Kalyani Steel and BMM Ispat among others, who are not having captive iron ore mines are keenly waiting for the auction of C-category mines. He said the entire process of auctioning these mines has been delayed as the government decided to find out the left over iron ore reserves in these mines. The work has been handed over to the state-owned Mineral Exploration Corporation Limited (MECL), which is taking time as it’s a daunting task, he said.

“The state government intends to generate more revenues from the auction of these C-category mines and the proceeds would go towards the special purpose vehicle (SPV), which will carry out the restoration of environment in the mining districts as directed by the apex court. Our transaction adviser, CRISIL has given its first report on how we can go ahead with the process of auction. Based on their report, we are submitting a detailed plan of action in our affidavit before the Supreme Court,” Girinath told Business Standard.

He said the government would wait for a suitable direction from the apex court before going ahead with the auction. If the court says not to delay the auction process, the government would immediately undertake the auction work.

“As desired by the government, if the court gives more time, then we will function accordingly. We are also waiting for the report from MECL on the extent of iron ore reserves left in these mines. MECL’s first report is awaited in October and the subsequent reports in November and December,” he said.

The state government has mandated MECL to study the reserves left in the top 15 mining leases in C-category. In the first phase, the government intends to put on the block these 15 mines. Till now, only 23 mines have started production with a combined production of 10 million tonnes per annum. Besides, NMDC Limited is producing another nine million tonnes per annum. The three-member green bench of the apex court is set to hear the government’s appeal on August 19 this year.