Supreme Court accepts CEC recommendations for auctioning iron ore in Karnataka

The Supreme Court today accepted the Central Empowered Committee's (CEC) recommendation that out of 25 million metric tonne (MMT) of iron ore stock from Bellary, Chitradurga and Tumkur in Karnataka, a quantity of 1.5 MMT per month be sold through e-auctions which will not be used for export.

The CEC report, accepted by the court, said lease-wise and grade-wise reserve price for iron ore for bidding will be fixed after considering the sale price obtained by National Mineral Development Corporation (NDMC).

The bench headed by Chief Justice SH Kapadia, however, clarified that the part of report stating that modalities recommended for iron ore sale will also apply to manganese ore will not apply to leases which are exclusively for manganese ore.

"The (CEC) report submitted on September 1, recommending (modalities for sale of iron ore)... is accepted subject to following clarification that para five (dealing with sale of manganese ore) will not apply to leases exclusively to manganese ore," the special forest bench also comprising of Justice Aftab Alam and Justice Swatanter Kumar said.

The CEC, in its report, had said, "The quantity of 1.5 MMT of iron ore per month will be sold and this quantity will be sold through e-auction(s). For this purpose, the mining lease-wise and/or grade-wise reserve price will be fixed after taking into consideration the sale price obtained or fixed by NDMC."

It said that only "steel and associated industries who have been wholly or partly dependent on iron ore from Karnataka for their own use, will be eligible to participate in the auctioning and no export will be permissible."

The CEC, however, had said units involved in pelletisation and benification (processing and value addition of ore) may be allowed to participate in the e-auction "provided that the iron ore so purchased after processing is made available to the steel and associate industries and no export will be permissible."

The CEC had recommended that from the amount gained by sale of iron ore, nothing should be disbursed presently to mining leases which were found involved in illegal mining where as only 80 per cent of the amount should be advanced to other lease holders and the rest 20 per cent be retained with the government.

It had said in addition to the sale price, the successful bidders will have to pay "applicable royalty, at 10 per cent of market price," forest department tax, sales tax, cess and other applicable charges.

The total amount will be first deposited in a designated nationalised bank, the CEC had recommended.

The bench clarified that in addition to the CEC recommendations, "We (apex court) want the accounts to be periodically accounted by the state's Accountant General."

The committee said the e-auctioning should be conducted by the MSTC, a mini-ratna PSU specialising in e-commerce, and suggested that for its services, a service charges of 0.3 per cent be fixed.

It also said that physical verification of the existing stock of the iron ore will be carried out before e-auction "so as to determine the quantity of iron ore of different grades physically available."

To prevent any wrong doing, the report had suggested that the "transportation route will be determined in such a way so as to ensure that the trucks transporting the iron ore pass through at least one check post having weigh bridge and where quality of the iron ore being transported will be verified with reference to the quantity loaded in the truck."

The report had recommended that a three-member 'monitoring committee' be set up for dealing with the various issues related to the sale and transportation of the existing iron ore, keeping account of the sale proceeds and related issues.

It said the monitoring committee will comprise Deepak Sharma, Additional Principal Chief Conservator of Forest, UV Singh, Chief Conservator of Forest of Karnataka Forest Department and HR Srinivasa, Director, Mines and Geology of Karnataka government.

The three officers are currently functioning as member of the joint team constituted by the apex court by it order dated May 6, this year.

The CEC had said if any violation regarding loading lifting and transportation of quantity sold by auction is found, the purchases will be held liable for "deterrent action including imposition of penalty and/ or debarring him from taking part in future auctions."

The report had come pursuant to apex court's direction dated August 28 to file a report charting out modalities for sale and keeping the accounts of sale proceeds of about 25 million MT of existing stock of iron ore pertaining to various mining leases in Bellary, Chitradurga and Tumkur in Karnataka.