Govt extends NMDC’s Donimalai iron ore lease after two-year suspension

The Government of India has signed an agreement with the Government of Karnataka and the Ministry of Steel to extend Donimalai Iron ore lease. NMDC has been operating the mine, but operations were suspended since November 2018.

The mine is extended for 20 years with effect from November 2018.

Exercising the power conferred to GOI under section 31 of the MMDR Act, 1957, the Government of India reached at an agreement with Government of Karnataka and Ministry of Steel to extend Donimalai Iron ore lease, said NMDC.

The company further said that the decision has not only paved way for operationalisation of the mine but is also a timely decision taken in a situation when the steel companies are facing a shortage of supply of iron ore.

Donimalai iron ore mine, which has a total concession area of 597.54 hectares and estimated resources of 149 million tonnes, will increase the annual iron ore production in the country by seven million tonnes per annum. Based on the existing high price of ore, it is expected that Donimalai Iron ore mine will contribute around Rs 400 crore to the state exchequer during the ongoing financial year.

Restarting the mine would contribute a total of about Rs 1,100 crore to the State exchequer a year. It will also take the nation a step closer to the Government’s mission of achieving 300 MTPA crude steel capacity by 2030-31.

NMDC’s Donimalai in Karnataka has remained non-operational since 2018 after NMDC and the Karnataka Government got into legal battle over the asset.

The then Congress-JDS-led state government in 2018 decided to levy a premium equivalent to 80 per cent on the iron ore extracted from mine, as a pre-condition to extending the lease. NMDC did not agree and stopped mining operations in November 2018. The company also moved Court against the decision, and obtained a favourable order. While the public sector miner was planning to start operations, the BJP-led Government also decided to cancel the lease.
Source: Business Standard