KOLKATA (miningweekly.com) – A mere substitution of a word in the Mines and Minerals (Regulation and Development) Act (MMRDA) 2015, effected by India’s federal government, has opened up a window for State-run miner NMDC to resume operations of the shuttered Donimalai mines in the southern state of Karnataka.

Last month, the Mines Ministry amended the MMDRA, replacing the word “may” with “shall” in the provision relating to renewal of mining lease applications to be considered by respective state governments.

Prior to the amendment, the relevant provisions pertaining to lease renewals read as “upon receipt of an application the state government may extend the mining lease by 20 years”. This has been replaced to read as, “upon receipt of an application, the state government shall extend the mining lease by 20 years”, thereby laying down that it would be mandatory for state governments to renew all expiring mining lease agreements for another 20 years.

In November 2018, the Karnataka government renewed the mining lease of the seven-million-ton-a-year Donimalai iron-ore mines in favour of NMDC, but incorporated a clause that the miner would need to pay 80% premium on sales by way of lease rental.

Having not accepted the condition of the lease renewal, NMDC closed down the operation and challenged the state government in the Karnataka High Court, which quashed the miner’s petition seeking scrapping of the clause.

The Karnataka government cited the word “may” in the MMRDA 2015 and claimed it had the prerogative over renewing the mining lease with changed lease rentals, based on premium on sales revenues, and announced its decision to hold a fresh auction of the Donimalai mines after NMDC had suspended operations.

The case between NMDC and the Karnataka government is currently pending before a tribunal, but company sources said that in view of the changes in the MMRDA making it mandatory for a state government to renew all expiring mining leases, the company was awaiting a directive from the federal Mines Ministry to the state government before taking the next step to reclaim the asset and resume operations at Donimalai.