KOLKATA (miningweekly.com) - In an incremental move toward getting Indian iron-ore mining back on track, a number of mines previously closed due to illegal mining would be put up for auction for captive consumption, the Steel Ministry said.

The government of the southern Indian province of Karnataka has decided to put 51 mines on the auction block, after their leases were cancelled last year.

The Indian Supreme Court ordered the cancellation of the 51 leases on grounds of carrying out mining operations beyond their leasehold areas. The apex court had clamped down on total of 166 mines in Karnataka for carrying out illegal mining and had categorised the mines based on the extent of illegal mining operations.

The 51 mines to be put up for auction were placed in Category C or charged with comparatively low level of illegality, which meant that illegal mining took place on betwee10% to 15% beyond the leasehold mining area.

According to a statement issued by the provincial government, the mines would be allotted to the highest bidder, but the bidder should be an end-user of iron-ore and the mines would be used exclusively for captive consumption.

No production from the mines would be permitted for merchant sale in the open market or for sale to another steel producers in the country, the statement said.

However, the provincial government would seek clarification from the Supreme Court to define ‘end-user’ and whether it would include hot metal producers or even value adding process like stand-alone beneficiation and pelletisation plants.

The provisional government would also seek court clarification onwhether end-users could include global steel producers. However, no export would be permitted by any successful domestic or foreign bidder.

The aggregate production of these 51 mines before they were shuttered down was estimated at 15-million tonnes a year
Officials in the Federation of Indian Mineral Industries, while welcoming the move to get the closed mines back into operation, said that it would take a while before actual production could be resumed since auction rules would have to be framed by the government.

Furthermore, since the entire issue of illegal mining was before the apex court and monitored by a Central Empowered Committee, it would also have to be clarified whether the auction process could be conducted by the provincial government or under aegis of the court.

According to data of Indian Bureau of Mines, Karnataka accounted for 12.3% of Indian iron-ore reserves estimated at 28.52-billion tonnes. Prior to the ban on mining in the province imposed by the court, total iron ore production from Karnataka was pegged at around 26- to 30-million tonnes a year.