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The state government of Karnataka announced that it has cleared the mining lease for National Mineral Development Corporation’s (NMDC) Donimalai iron ore mine in Bellari district, according to media reports. The Donimalai mine has a capacity of producing 7mn mt of iron ore per annum.


The mine was in the custody of state-owned NMDC Ltd for 50 years and contributed to 18pc of its production. However, its lease period ended in 2018 and the government demanded an 80pc premium from the company. 


The State has suffered revenue losses due to the halting of mining activity.  After the Central government’s intervention, the mine will resume operation after two years. 


The Karnataka government is expected to earn Rs647cr ($8.8mn) per annum from it.


As per reports, the government has proposed 22.5pc additional premium on Donimalai sales volume which could be negative for NMDC.


The resumption of mining activities at the mine will be a relief for the NMDC as its iron ore output had halved in April due to coronavirus-induced lockdown. The mine’s groundbreaking ceremony is on September 18.

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