India: Monitoring Committee Recommendations to Supreme Court Relieve Karnataka Iron Ore Miners

Committee has been recommended that a “certain quantity of iron ore fines (of all grades) equivalent to the imported quantity during that year (from outside the country and other states), as well as equivalent to the quantity produced from C-Category mines, may be allowed for export through e-auction. Exports of ore have to go through all the process of e-auction with the additional modalities pre-defined by the honorable Supreme Court.

Some conditions recommended on the export of iron ore from Karnataka-:

• No lessee/leaseholder shall be allowed to sell iron ore directly to the exporters.

• Old Stocks which could not be sold after four attempts should also be allowed to be exported through e-auction with the same modalities and order approved by the court.

• There should not be any exports of iron ore lumps. The existing ratios rations of fines and lumps should be maintained by the lessee and any change in the ratio compared to the ratio of past 4 years will be considered as a violation, attracting penal actions as deemed fit.

• The lease-wise entitled quantity for export only should be through e-auctions by monitoring committee only with all approved modalities.

Monitoring Committee before submitting its report to Supreme Court had a meeting with users and stakeholder of iron ore beneficiation plant, pellet plants, and K-SIMA (Karnataka sponge iron manufacturer associations. They all had opposed the idea for export of lumps and pellet from the state. The submissions made by the FIMI and K-SIMA have been examined and then it was observed that due to the import of 6.67 MnT iron ore in FY19 sale through auction has fallen short as compared to the average auction sales of the previous years.

Earlier on 23rd Oct 2018, a petition was filed by the Vedanta to permit the lessees in Karnataka to exports iron ore which is not willing to purchase in the domestic market through e-auctions.

Six iron ore mines going to expire lease in FY’20-:

By end of FY’20, about six mining leases will stop mining on account of expiry of their lease periods, under the amended MMD&R Act, 2015. The MPAL (Maximum Permissible Annual Limit) for the sale leases is about 2.66 MnT. Iron ore equivalent to this quantity may not be available from April 2020, till the said expired mining leases are auctioned and production commissioned.

However, there is likelihood of resumption of about seven mines of A&B category with around 1.528 MnT of MPAP (Maximum Permissible Annual Production).

According to SteelMint data, Karnataka has registered a decrease of 5% in yearly sales e-auction volumes in FY’19. Total iron ore allotted quantity in FY’19 was recorded at 26.52 MnT in FY’19 compared to 28.05 MnT in FY’18. To contrast, Karnataka iron ore production in FY19 was learned to be around 28.5 MnT in FY19.