NMDC seeks new iron-ore leases through preferential allotment

KOLKATA (miningweekly.com) – India’s largest iron-ore miner, NMDC, will be able to ramp up its yearly production from 30-million tons currently to 75-million tons by 2019 and 100-million tons by 2022, if it were awarded additional mining leases in iron-ore-bearing provinces.

NMDC has conveyed to the government that its current operational mines, which are predominantly located in the central province of Chhattisgarh, will be a limiting factor in rapidly expanding production capacities, unless it is able to secure fresh mining leases in other geographies.

The government-owned and -managed miner has communicated that the government should allocate fresh mining leases under the preferential route as per the newly amended mining legislative norms.

NMDC wants the government to award fresh mining leases to the company under Section 17A of the Mines and Minerals (Development and Regulation) Act 2015, which will exempt the company from having to follow the mandatory auction route for securing the new leases.

The relevant section states that the “state government may, with the approval of the central government, reserve any area not already held under any prospecting licence or mining lease, for undertaking prospecting or mining operations through a government company or corporation owned or controlled by it and where it proposes to do so, it shall, by notification in the official gazette, specify the boundaries of such area and the mineral or minerals in respect of which such areas will be reserved”, a NMDC official pointed out.

NMDC has also stated that it will be willing to consider development of new iron-ore blocks in other provinces like Odisha, Jharkhand, Karnataka and Chhattisgarh through joint ventures or special purpose vehicles as may be decided by the central or provincial governments.

Securing additional iron-ore mining leases through the preferential route is also critical for the miner to offer higher volumes through merchant sales, as a substantial part of its current production has been allocated for its upcoming steelmaking project.

NMDC is constructing a three-million-ton-a-year steel mill at Nagarmal, Chhattisgarh, for which it is investing $284-million to develop Deposit 4 of its iron-ore reserves at Bailadila, also in the same province, which will produce seven-million tons a year to feed the steel mill.