In a relief to the domestic steel industry, the Supreme Court on Friday allowed state-owned NMDC to operate its two mines for production of one million tonne iron ore per month in Karnataka?s Bellary district.

?We are of the view that under the extraordinary circumstances, NMDC be allowed to operate these mines (two mines) to the extent of mining one million tonne per month from August 8,? a special forest bench headed by Chief Justice SH Kapadia said, adding that ?it was observing the mandate of Article 21 of the Constitution for precautionary principle and internal generational equity?.

However, it clarified that no part of the iron ore extracted by NMDC would be exported. Besides, it refused to allow private mine owners to resume mining operations in the area.

Directing that the Karnataka government would levy royalty at the rate of 10% of the current market value of the iron ore, it also said that a comprehensive environment impact assessment (EIA) would be undertaken by the Indian Council of Forestry Research and Education (ICFRE).

ICFRE, in collaboration with the Wildlife Institute of India, Forest Survey of India and other such expert organisations, as decided by it in consultation with the ministry of environment and forest, will submit the report within three months. Besides, the state government has been told to submit a report within three months on the reclamation and rehabilitation plan for the Bellary district.

In response to the apex court?s order last week, Attorney General GE Vahanvati told the court that the domestic requirement of steel being met out from Karnataka was around 25 million tonne in 2010-11.

According to the Mineral Conservation and Development Rules (MCDR) returns filed with the Indian Bureau of Mines by the mine owners in Bellary for 2010-11, 26.50 million tonne iron ore was reported as despatch for domestic consumption.

?The requirement of iron ore by the domestic industries was about 105 million tonne in 2010-11 and the export of iron ore is estimated at 92 million tonne,? a ministry of environment and forest report stated while quoting the ministry of steel.

However, the ministry of mines pegged the total iron ore production in 2010-11 at 204 million tonne, out of which 83 million tonne was lump-ore and 121 million tonne fines. The ministry of commerce said that during 2008-09, the domestic steel industry consumed 85.30 million tonne of iron ore.

During 2008-09, total production of iron ore was 215.44 million tonne, Vahanvati said, adding that out of this, the domestic steel industry was able to consume 85.30 million tonne and 105.87 million tonne was exported. The balance 24.06 million tonne was rendered surplus, he added. However, the ministry of steel said that it did not have any authentic information regarding the quantity of iron ore sourced by the iron and steel industry from the mines either in Karnataka or the Bellary district.

The apex court had ordered suspension of mining of iron ore in the Bellary district, saying ?over-exploitation? of the area had caused large-scale environmental degradation.

The apex court had passed the order by taking note of the latest 23-page report of its expert panel, Central Empowered Committee (CEC), which said most of the miners in the region were indulging in illegal mining, causing considerable environmental damage.