Eight iron ore mines of Karnataka to restart operations by July end

By the end of July, eight iron ore mines of Karnataka is likely to start their operations and would result in production of 5.5 million tonnes per annum (mtpa) of iron ore and thereby removing some deficiency in supply. The initial Reclamation & Rehabilitation (R&R) plan has been cleared for the eight mines and final approval will be given today by Central Empowered Committee (CEC).

State owned NMDC, which currently produces 10-12 mtpa has got permission from the Supreme Court (SC), which is the only miner to get the permission. Miners such as Sesa Goa, Mineral Enterprises, Vesco and Mysore Minerals will start the production in a similar way by the end of this month. Earlier the Supreme Court had banned ore mining after their wrong operation came in surface. NMDC was only allowed to restart operation in Bellary after release of comprehensive report by the CEC found company not guilty, while the other mines were banned from resuming operations.

According to the CEC report, Karnataka mines were placed under three categories A, B and C based on their extent of illegality with category A by and large, showing no illegal operations. The mine owners were being ordered by the SC to get approval from the Indian Council of Forestry Research and Eduction, Indian Bureau of Mines and the CEC in order to resume their normal activity.

Director, Department of Mines & Geology, Karnataka, HR Srinivasa said, some more mines will be allowed to restart, taking total output by the fiscal-end to around 10 mtpa, in addition to NMDC’s output. The iron ore production from Karnataka was capped by the SC at 30 mtpa.

Steel plants in Karnataka started complaining on the shortage of raw material after SC had intervened and announced that all the iron ore should be sold through e-auction.  However, the government has earned higher revenue after SC’s guidelines. In FY 2011, Karnataka government has earned an amount of Rs 520 crore as royalty on 33 million tonnes of ore production, which rose further to Rs 730 crore in the FY 2012 on an output of 22 million tonnes.

Srinivasa by adding further said, the government expects Rs 15,000 crore revenues from the state’s iron ore sector from multiple sources like levy of fines on illegal mines, a portion set aside from e-auction proceeds and also from the proposed auction of certain mines. The revenue generated from these sources will be placed under a special purpose vehicle and will be used for developing infrastructure in three iron ore mining districts such as Bellary, Chitradurga and Tumkur.