After exhausting all other options, NMDC Ltd moved the Karnataka High Court on the issue of levying 80 per cent premium by the Karnataka government on the iron ore extracted from Donimalai mines in the state, said a top official of the miner.
NMDC suspended iron ore mining from its Donimalai mine in Karnataka following the state governments decision to impose 80 per cent premium on the ore sales from that mine whose lease has been extended by the government with effect from November 4 for a period of 20 years.
The suspension of production from Donimalai mines will have some impact on the output target for the current fiscal, NMDC CMD N Baijendra Kumar said.
NMDC recently filed a petition in the HC challenging the Karnataka government move to impose premium on the ore extracted from Donimalai mines.
"Our objective is to request the state government and solve the issue very amicably. We pleaded with folded hands before the government and requested that this (levying 80 per cent premium) is not legally correct.
"I told the Chief Minister (H D Kumaraswamy) that we are a public sector company and please help us. The Chief Minister never said no.
"It is at the bureaucratic level, there are some noises. Finally ,we had to move the court because we exhausted all other options," Kumar told PTI.
A senior official of NMDC said with the 80 premium, the miner would be losing Rs 1,348 per tonne which may result in a loss of Rs 944 crore per annum as the PSU extracts about seven million tonnes of iron ore a year from that mine.
During FY18, NMDC produced 35.57 million tonnes against 34 MT in FY2017.
The Karnataka Cabinet has approved the mining lease of Donimalai till November 2038 on payment of 80 per cent of the average sale value as published by Indian Bureau of Mines, according to Mining Secretary Rajendra Kumar Kataria.
"Since the matter is in the court, we will wait for the outcome. We will file our reply to the court hopefully next week well within the stipulated time," Kataria said when asked about the governments move.
Kataria had earlier said the state in the recent past had auctioned 12 mines where the weighted average of the premium was more than 110 per cent and NMDC also participated for mines for which it offered 95 per cent and 105 per cent as premium.
Justifying the move to take legal recourse, the NMDC CDM said they offered high premium for some of the mines keeping in view the market dynamics and competition.
NMDC, in its petition, said the imposition of 80 per cent premium is "illegal" and the condition must be quashed.
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