Fresh mining leases only after apex court resolves all matters

Written by P P Thimmaya | Bangalore | Updated: Apr 25 2012, 09:12am hrs
Uncertain times await investors planning to start iron-ore mining in Karnataka, as the state government has made it clear that fresh leases will be given only after the Supreme Court clears all legal cases concerning the sector.

The state's controversy-ridden industry has come under the purview of the central empowered committee (CEC) of the Supreme Court which has recommended a ban on issuing fresh mining permits.

A senior state government official with the commerce and industries department told FE that they have not notified any new areas for iron-ore mining and would look into it only after the SC clears all the cases.

The state government already has a huge pending list of applicants seeking fresh iron-ore mining leases. Those waiting for the same include ArcelorMittal, Jindal Vijaynagar Steel, Posco, etc. In fact, several of these companies have plans of to set mega steel plants in Karnataka.

During the Global Investors Meet held in June 2010, Karnataka had attracted investment proposals in excess of R2 lakh crore from the iron and steel industry. Some of the global giants like ArcelorMittal and Posco signed MoUs with the state government to set up steel plants with a capacity of six million tonne per annum, with proposed investments in excess of R30,000 crore.

It may be noted that these steel majors sought captive iron-ore mining leases from the state government as a precondition for starting their operations.

The state government in its policy of granting fresh iron-ore mining leases has made it clear that only those companies which engage in value addition, i.e. setting up of steel plants, would be given permits.

At one time, there was a proposal from the state government for companies setting up steel plants: Get 50% of ore requirement through captive mines, and procure the rest from the open market.

A company official said they were watching the developments unfolding as per the SC direction and are looking at the possibility of taking over any existing mines if such a situation arises.

As per the CEC recommendations, the iron mines have been classified under three categories A, B and C. As of now, the SC has allowed resumption of mining in 43 leases subject to rehabilitation and reclamation work being undertaken.