Dispute between government of southern Indian state of Karnataka and state-run iron ore miner NMDC Limited has escalated with the former threatening to cancel mining lease of NMDC for Donimalai iron ore reserves in Bellary district in the region, a government official said on Monday, November 19.
The dispute stemmed from demand of the Karnataka government that NMDC Limited pay a premium on sales from Donimalai to the state government as such a payment is part of the mining lease which was renewed in favor of the miner for 20 years on November 4, the official said.
Sources said that even though the lease for Donimalai has been renewed NMDC Limited halted production from the mines as the miner is not willing to pay the state government 80 percent of sales value as lease rental as this will make operations of the mine unviable. The miner is expected to move court against the state government.
The Donimalai mines produce an estimated 6 million mt of ore per year.