Public sector miner NMDC Limited has got an unforeseen domestic opportunity, especially in Karnataka, in the light of the final report on illegal iron ore mining submitted by the Central Empowered Committee (CEC) to the Supreme Court early this month.
The CEC has classified the over 150 mines in Karnataka, where iron ore production had been stopped on the directives of the apex court, into three categories. Of these, close to 50 mines categorised under class-C for alleged gross violations have been recommended for cancellation. The CEC has recommended resumption of operations under 45 mining leases in category A while suggesting a reclamation and rehabilitation programme for 72 mines that fall under class - B.
“We could see some opportunity in class - C mines where the mining leases are expected to be cancelled,” N K Nanda, chairman and managing director of NMDC, said here on Friday. I have asked someone to find out what are these mines, how spread out they are and size and so on.” Though there is no clarity in the report as to what should be the way forward in case of mining leases facing cancellation, the Supreme Court may take a call in this regard after it resumes hearing in this case on March 2. NMDC is pinning hopes on one of the possibilities in which the court may entrust the operations of such mines to it.
Nanda said: “The Supreme Court needs to give directions as to what will happen to these mines that are going to be closed. Then the matter will go to the mines ministry for further directions. Lease allotments will be made by state governments; meaning, these mines will be delisted and again notified. Or the Supreme Court may give directions that NMDC should operate these mines or ask us to revive the mines in a scientific manner. Then we will have a role. But all this is a wild guess.” Otherwise, the granting of fresh leases will take a natural course of law because no one can take a lease and give it to someone else just like that, he said. However, Nanda added that they would be interested only in mines with reserves ranging from 50 million tonnes and above.
All these class-C mines are all located in Bellary and Chitradurga regions in Karnataka. If they are small areas then they are not of much use for the company in term of operational viability. Usually, NMDC-operated mines are as big as 600 hectares each. “A mine with a reserve of 100 million tonnes is good for us. That is why we have always been asking the Government of India that it should give us mines having at least 100 million tonne reserves,” he said.
NMDC produces 70 per cent of its annual capacity of about 32 million tonnes of iron ore from Bailadilla cluster in Chhattisgarh and the remaining comes from its mines in Karnataka.
The company is set to start due diligence agencies this month as part of the preacquisition process necessary for rock phosphates assets of Mineakmers, apart from the 970-million-tonne Ridley iron deposits of Atlas Mining — both in Australia — and the 1.5-billion-tonne coastal iron ore assets identified for acquisition in Brazil, Nanda said.
NMDC had signed an MoU with Minemakers in June last year for acquisition of 50 per cent stake in Wonarah rock phosphate reserves, whose exclusivity ends this month.
“We are appointing the due diligence agency for rock phosphate mines on Monday and ask the company to wait until the process is over,” Nanda said.
The agencies are expected to submit reports in 45-60 days after which the company proceeds to sign MoUs with the companies.
On the progress on mining investments with respect to the assets of Legacy Iron ore, which it acquired last year, the NMDC CMD, who is proceeding to Australia to attend the board meeting of the company scheduled on February 29, said they would be knowing the exact capex requirements only after completing the exploration for the initial 15 million tonnes of reserves.
In addition, the company is also in discussions for the acquisition of two coal projects in Russia and another coal project in West Virginia in the US. “We would be able to tell something about these discussions by the middle of March this year,” he said.
MoU with Indian Railways
The Indian Railways and NMDC would be signing an MoU in the first week of March for the Rs 700-crore doubling of railway line between Bailadilla and Kirandul in Andhra Pradesh. The company hopes to increase its ore dispatch capacity by 3-4 million tonnes a year on this route once the project is completed. The Railway Board has completed all the formalities regarding the proposed MoU for the project, Nanda added.
