Iron ore e-auction to fetch Karnataka Rs 850 cr

The Karnataka government is set to earn a windfall of Rs 850 crore by way of royalty from the e-auction of 25 million metric tonnes (mmt) of iron ore. This amount that the department of mines and geology (DMG) will earn is almost double compared to the earnings of entire last fiscal.

In addition to this, the Central Empowered Committee (CEC) has recommended for routing of iron ore sales through the e-auction as and when the Supreme Court permits regular mining of iron ore in the state.

According to the director of DMG to CEC, the government got a royalty of Rs 435 crore during 2010-11 as royalty for 33.75 mmt iron ore produced and sold in the state. The average rate of royalty works out to Rs 129 per metric tonne. As against this, the government will receive royalty at the rate of about Rs 340 per metric tonne for the iron ore sold through e-auction on September 14 this year.

With this, the royalty receivable by the Karnataka government for the 25-mmt iron ore permitted to be sold through e-auction may exceed the total royalty it received for the iron ore during 2010-11. The Supreme Court, in its September 2 order, had granted permission for the sale through an e-auction of about 25 mmt of the existing stock of iron ore in the districts of Bellary, Chitradurga and Tumkur.

Even though the mining operations have now been closed in all the iron ore leases except in the two leases of NMDC Ltd, Karnataka would not lose revenue towards the royalty and by way of the forest development tax besides other charges receivable by it on the iron ore, the CEC said in its report submitted to the Supreme Court yesterday.

Apart from this, the DMG is likely to witness a huge rise in its royalty earnings once the regular mining restarts in the state. The CEC has recommended that as and when the Supreme Court permits the resumption of mining operations, the entire production of the mining leases should be sold through e-auction under the overall supervision of the monitoring committee.

The Supreme Court has appointed the three-member panel with DMG director H R Srinivasa, additional principal chief conservator of forests Deepak Sharma and, U V Singh, chief conservator of forests to oversee the e-auction of iron ore in the state.

"This will, apart from ensuring transparency, curb to a great extent the unethical practice of under-payment of royalty, forest development tax, sales tax and other statutory charges by under invoicing the sale price," the CEC said. “It will also help check the sale of illegally mined iron ore in the garb of legally mined iron ore and excess production of iron ore than what is permitted as per the approved mining plan."