KOLKATA (miningweekly.com) – Indian iron-ore major NMDC Limited has hiked its reserve estimates at one of its mines to 111-million tonnes from 17-million tonnes, enabling the miner to sharply increase production in the short term.

The higher reserve estimates at the Donimalai mines, in the southern Indian province of Karnataka, came as a relief for the country’s largest iron-ore producer, as production from the mines had been steadily dwindling over the past few years.

Officials said that production from the Donimalai mines was progressively reduced in view of a Supreme Court order, falling last year from levels of nine-million tonnes a year to seven-million tonnes a year.

Last year the Indian Supreme Court, while hearing cases on illegal mining in Karnataka, advised that annual production from each of the iron-ore mines in the province should be capped so as to ensure that reserves in each mine lasted at least 20 years.

With the increase in reserve estimates, the government-owned and -managed NMDC Limited was now in a position to ramp up production from Donamalai to around 10-million tonnes a year, though officials declined to give a timeframe for achieving the higher target.

A revised mining plan had been submitted to the Indian Bureau of Mines indicating the higher reserve estimates and the plan to increase production.

Of the 111-million-tonne reserves at Donamalai, 45.89-million tonnes had been categorised as ‘proven’, a further 34.7-million tonnes as ‘probable’ and the balance as ‘possible’, the official added.

The new reserves has come as a relief to the domestic steel industries operating in Karnataka, which had been starved of raw material ever since the Supreme Court imposed a ban, in 2011, on all iron-ore mining operations, while it heard cases on illegal mining.

Though the apex court, in 2012, permitted 108 iron-ore mines categorised as minor violators to resume operations, only 25 mines, including two of NMDC's mines, had been able to resume functioning.

Iron-ore production from these 25 mines was also much below the 30-million-tonnes-a-year cap that was imposed by the Supreme Court.

NMDC achieved an iron-ore production of 30.18-million tonnes during 12-month period ending March, an increase of 11% over the corresponding previous period.

While the investments that were riding on increasing production from Donamalai were not available and officials said that specific capital expenditures had not been worked out, NMDC had earmarked a total investment of $738-million during 2014/15 to ramp up production, substantially higher than the $425-million spent in the previous fiscal period.