SC panel favours reservation of cancelled leases for state PSUs

Category C, which has 49 mining leases with a production capacity of 5 million tonne per annum, may be reserved for PSUs

Iron ore-starved steel mills may look forward to more supply of raw material for their blast furnaces as the Supreme Court panel has recommended that Karnataka government may enter into formal agreements/MoUs with end users for sale of iron ore.

The Supreme Court appointed Central Empowered Committee (CEC) has recommended that the leases falling under Category C mines may be reserved for the State Government Undertakings after canceling their licenses.

In its report dated February 3, 2012, the CEC had recommended that the mining leases falling in Category C should be cancelled on account of being found to be involved in illegal mining on large scale.

“Such mining leases should be assigned in a transparent manner to the end users and based on the market value of the mineral and without any hidden subsidy,” it said in the report.

However, in its latest report dated October 10, 2012, the CEC said, “After considering that the MMDR Act, 1957 or the rules made there under do not specifically provide for allotment / assignment of mining leases at market value, such cancelled leases may be reserved for the state government undertakings after following the procedure provided in Section 17 (A) of the MMDR Act, 1957.”

It also said that after granting the leases to state undertakings, they may enter into formal agreements/MoUs with the end users identified through a transparent process for undertaking the operations and purchasing the minerals at a pre-determined price.

“The CEC recommendation is a welcome step as it ensures supply of more raw materials to the user industries. However, it provides for sale of ore only through the e-auction process and the private sector can only engage in extracting the ore,” industry sources said.

There are 49 mining leases falling in Category C with a total lease area of 1,914.66 hectares. The annual permissible production of those leases is estimated at about 5 million tonne.

The end users (steel plants and associated industries) located in Karnataka and adjoining states and those who have been using the iron ore obtained from the mining leases in Karnataka will be eligible to participate in the transparent bidding process for assignment of the mining leases for undertaking the mining operations and supply of the minerals.

The CEC has also stipulated that the allotment of Category C mining leases be done only after the leasewise Reclamation and Rehabilitation (R&R) plans are prepared and the mining operations are found to be environmentally feasible and sustainable either individually or after amalgamation of two or more leases.