Karnataka to assess reserves before auction of C-category mines

MECL likely to assess iron ore reserves left in C-category mines

The Karnataka government has moved a step closer to hastening the auctioning of C-category iron ore mines to end-users. Before the auction, the government plans to assess the extent of iron ore reserves left in these mines. A senior government official said this task was likely to be handed over to state-owned Mineral Exploration Corporation Ltd (MECL).

“It is essential to ascertain the exact quantity of iron ore reserves in these mines in a scientific manner. We want to hand over the work to MECL. We have prepared a note in this regard and sent it to the state cabinet for approval,” said Tushar Girinath, secretary (mines), government of Karnataka.

Earlier, the government had mandated National Institute of Technology (NIT)-Surathkal to examine the reserves. But the entity could complete the task for one of the 15 mines. As NIT had sought more time, the government had decided to hand over the job to a professional organisation such as MECL, Girinath said.

The Supreme Court had ordered the cancellation of 51 C-category mining leases and directed the state government to re-allot these through a transparent mechanism. To begin with, the state government has identified 15 potential mines for allotment.

Girinath said the government would file an affidavit before the Supreme Court, explaining the measures taken to re-allot these mines. By studying the ore reserves in these mines, the government intends to find out how much ore was extracted by the previous lease owners and match that with the royalty paid by them. If the extracted ore didn’t match the royalty, the government would send demand notices to previous lease owners, asking them to pay the remaining amount at the current royalty rate, Girinath said.

Earlier, the Indian Bureau of Mines had said the 51 C-category mines could produce five-six million tonnes (mt) of iron ore a year.

The Supreme Court has capped the production of iron ore in Karnataka at 30 mt a year, against the steel sector’s annual requirement of 36 mt. So far, only 25 mines have started production, with a combined capacity of 10 mt a year. NMDC is producing an additional nine mt a year.

“We need to find out these things before we go for auction of the mines. We have told the previous lease holders to carry out reclamation and rehabilitation activity in those mines at their cost, or deposit the amount required to the government, according to the direction of the apex court,” Girinath said.

The government had appointed CRISIL as transaction advisor for the auction of the mines. CRISIL would prepare the tender documents, Girinath said.