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NMDC Resumes Work At Chhattisgarh Mines After A Week And Rs 100-Crore Hit

Production resumed at two iron ore mines in Chhattisgarh following the government’s intervention a week after protests by tribals.

Iron ore mining has resumed in Bacheli and Kirandul blocks, VS Prabhakar, chief operating officer of NCL—a joint venture of NMDC and Chhattisgarh Mineral Development Corporation. (Source: NMDC website)
Iron ore mining has resumed in Bacheli and Kirandul blocks, VS Prabhakar, chief operating officer of NCL—a joint venture of NMDC and Chhattisgarh Mineral Development Corporation. (Source: NMDC website)

NMDC Ltd. has resumed production at two iron ore mines in Chhattisgarh following the state government’s intervention, nearly a week after protests by tribal communities halted work.

Iron ore mining has resumed in Bacheli and Kirandul blocks, VS Prabhakar, chief operating officer of NCL—a joint venture between NMDC and Chhattisgarh Mineral Development Corporation—told BloombergQuint. “The production loss at the two mines is expected to be around Rs 100 crore.”

Mining was suspended at Bailadilla complex after tribal groups agitated against iron ore mining on the hills in Deposit No. 13, including new iron ore mines that are being developed by NCL. Mining was also halted at Kirandul and Bacheli mines on June 7 and June 11, respectively, Bloomberg reported.

The mines, Prabhakar said, were allowed to resume work after fulfilling conditions like no mining in Deposit No. 13 until further orders, curbing tree-felling and setting up a committee to address the Gram Sabha concerns, which were a prerequisite for getting clearance from the forest department for land acquisition.

A contract for excavation and mine development in the region was awarded to Adani Enterprises Ltd. last year, according to NMDC’s annual report.

The mine, a company official said on condition of anonymity, targets production of 0.6 million tonnes of iron ore in 2019, scaling it up to 10 million tonnes in eight years. Although the protest was over mining in Deposit 13, it escalated to Bacheli and Kirandul blocks, the official said.

Brokerage JPMorgan Chase & Co. said in a note that the halt in mining could affect NMDC’s volumes. In the absence of intervention, NMDC, according to the note, could have potentially lost out on 72 percent of total volumes, and pegged its minimum loss in volumes at 32 percent. The note also said 10.5 million tonnes of iron ore was mined at Kirandul, comprising 32 percent of NMDC’s total output; 12.9 MT—or nearly 40 percent output—was mined in Bacheli.

NMDC’s production losses aren’t limited to Chhattisgarh, which accounts for about 72 percent of its output. The company’s iron ore mine in Donimalai, Karnataka, has been ordered shut pending litigation, losing 0.5 million tonnes per month in production since November last year, according to Bloomberg.

On Thursday, NMDC shares fell 6.8 percent intraday before recovering to close 1.40 percent lower at Rs 105.80 apiece on the BSE. The benchmark Sensex lost 0.04 percent to end the day at 39,741.36 points.