NEW DELHI: State-run NMDC Ltd hopes to resume production at the Donimalai mine in Karnataka — which was mired in controversy over renewal — as the new mining laws favours the company and discussions at the higher level were underway for extension of the mining lease.
The country’s biggest iron ore miner plans to spend about Rs 2,300 crore in capital expenditure next year to raise production and also develop two new coal blocks allotted by the government. To ease the concerns of shortages of the key raw material, it plans to raise production by as much as 50 per cent to 48 million tonnes (MT).
“Our production will surpass 32 million tons this year to reach 41 MT in FY21, and 48 MT including the 7 million tons of iron ore from the Donimalai mine in Karnataka. Supplies will come mainly from our mines in Chhattisgarh, apart from Donimalai,” Amitava Mukherjee, Director of Finance, told Express. Recently, the Chhattisgarh government has extended leases of NMDC’s four mines in the state to avoid interruptions in iron ore supply to the steel sector.
The Karnataka government withdrew the lease for Donimalai in November 2018 after NMDC denied higher royalties from profits demanded by the State. Four months after the Centre amended the Mining and Mineral Development Act making it mandatory for state governments to renew public sector mining leases without going through the auction process, the stalemate over renewal of the Donimalai mining lease in favour of NMDC continues.
The matter is now pending with a Mines Tribunal. The development comes when over 200 merchant mines leases are expected to be cancelled in March and put on auction, squeezing domestic iron ore supplies to a great extent.
Over next three years, NMDC plans to double production as most customers ramp up steel production in the ensuing years.