India’s NMDC gets four iron-ore leases renewed

KOLKATA (miningweekly.com) – The government of Chhattisgarh has renewed the mining leases of four iron-ore mines in favour of NMDC, throwing a lifeline to the miner, already facing closure of one mine in the south.

The Chhattisgarh government has renewed the leases for 20 years, ahead of expiry of the existing lease in March 2020.

This has come as a breather for NMDC, which has been forced to shut down operations at its Donimalai iron-ore mine in southern India, where the Karnataka government stipulated that the miner pay 80% premium on sales as condition for renewal of the lease.

The renewal of lease for four of its Chhattisgarh iron-ore mines is crucial for NMDC as these mines account for more than 70% of its total iron-ore production of 33-million tons a year.

“We are grateful to the government of Chhattisgarh and especially to chief minister, Bhupesh Baghel and top officials for their support to NMDC in granting extension of lease for four mines for another 20 years,” NMDC chairperson N Baijendra Kumar said in a statement.

The renewal of lease by the Chhattisgarh government was enabled by recently amended mining legislations that limited the discretionary powers of the state government in process of renewing mining leases.

Earlier this year, the federal Mines Ministry amended a provision in the Mines, Minerals Development and Regulation Act 2015, merely changing a word ‘may’ and replacing it with ‘shall’, which in effect limited the powers of the state government in deciding to renew expiring mining leases.

The older provision read as “upon receipt of an application, the state government may extend the mining lease by 20 years.” This was interpreted as vesting the state government with the powers to decide on to renew a lease or not. However, the amended provision read as “upon receipt of an application, the state government shall extend the mining lease by 20 years.”

The mere switch of the word in the provision made it mandatory for a state government to renew an expiring mining lease without vesting such a state government with any discretionary power.

However, officials in the Mines Ministry said that the Chhattisgarh government had gone by the ‘spirit of the amendment and moved fast in renewing the lease in favour of NMDC Limited’ and not succumbed to dilatory policy inaction which could have risked continuing and uninterrupted mining operations once the lease expired in March 2020, while the state government took it time in formally notifying the renewal, even if such was mandatory.