CRU’s Indian office reports that the Indian Supreme Court’s hearing on 3rd September 2012 has concurred with the Central Empowered Committee (CEC)’s recommendations in its report published 29th August to allow 18 mines in Category A to re-start operations.

Out of the 18 mines, 16 mining leases are located in Bellary and 2 in Chitradurga districts in the state of Karnataka SW India. These mines were recorded with the least irregularities or no irregularities. One mining lease (ML – 2346) owned by Mineral Enterprises Ltd. (MEL) has all the statutory sanctions, permissions and approvals in place. The remaining 17 leases are also likely to get all statutory sanctions and permissions in due course. Overall for the 18 mines, Rehabilitation and Resettlement (R&R) plans have been approved and implementation on the ground has commenced.

The combined production capacity of the 18 mines, under the permissible production limits as defined by CEC, is 6.96Mt/y of iron ore and 0.42Mt/y of manganese ore.
Of these 18 mining leases, the Supreme Court has instructed six (with a combined permissible production capacity of 2.78Mt/y) to abide by special conditions depending on the investigations, inquiry or proceedings on-going with these mines in various courts.

However, these mines will still take time to actually start their operations…
With regards to the timing for the production to come on-stream, CEC, in its report dated 29th August 2012, says 12 mines will be eligible to resume production after all statutory approvals have been received in about a year’s time, amounting to 4.5Mt/y of production capacity. However, five mining leases are not eligible to restart operations yet, even after they obtain all approvals. Nevertheless, the continuation of mining operations on 18 mines is linked to the successful execution of the Supplementary Environmental Management Plan (SEMP) which is part of the R&R plan.

Other than these 18 mines, there are three ‘Category B’ mines with combined permissible (as per CEC) production capacity of 3.34Mt/y which have been approved with R&R plans. Among these include one mining lease of Sesa Goa with production capacity of 2.29Mt/y.

Mining was banned in iron ore producing districts of Karnataka from April 2011 following the Supreme Court’s direction and only state run National Mining Development Corporation (NMDC) was allowed to continue operations and supply steel plants in Karnataka. However, NMDC has been unable to meet all the required demand and the State’s largest integrated producer, Jindal South West has been forced to import ore from Australia at prevailing world prices.

The Central Empowered Committee (CEC) categorized the mines in three categories, ie A, B and C, depending on the extent of violations, in increasing order. In Category A, there are a total of 43 mining leases spread across the three districts of Bellary, Chitradurga and Tumkur with a combined production capacity of 11-12Mt/y.