Govt amends MMRD Act, NMDC to regain iron ore mine in Donimalai

Oct 11,2019

In a major relief to National Mineral Development Corporation, the Central Government has amended the Mineral (Mining by Government Company) Rules, 2015, and made the renewal of mining leases of public sector companies mandatory without going through the auction process.

The amendment effected through a notification said the State Government, upon receiving an application for the renewal of a mining lease by a government company shall for reasons to be recorded in writing, extend the period of mining lease for a further period up to 20 years at a time.

As per the old norms, the word “may” was used in place of "shall” giving scope for various interpretations by the state governments. The new amendment paves way for the renewal of NMDC's iron ore mining lease at Donimalai in the Bellari district of Karnataka. NMDC suspended operations at the mine after its lease expired in November 2018.

NMDC has been the leaseholder for Donimalai iron ore mine since 1968. Last November, the Karnataka government issued a letter for extension of the lease for 20 years on a condition that the state-owned company should pay a premium of 80 percent on the sale value of the mineral, as determined by the Indian Bureau of Mines.

NMDC challenged the premium demand in the Karnataka High Court through a writ petition. In July, the High Court set aside the condition for premium.

Subsequently, in August the Karnataka government withdrew the approval for an extension of the lease and decided to auction the iron ore mine as per the Mines and Mineral Regulation (Development) Act.

NMDC moved the Revisionary Authority in the Union Ministry of Mines, which agreed to hear the case if the Karnataka government withdraws the plan to auction the mine and stayed further proceedings in the case.

Ending the stalemate, the Centre on September 27 amended the MMRD Act and ensured that the NMDC lease is renewed.

With several mine leases owned by NMDC and MOIL mines coming up for renewal over the next two years, the Central government has passed a clear message to state governments and ensured that renewal of mine leases owned by government companies in the future is not jeopardized.

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