India’s Supreme Court has ordered that 15 iron ore mines in the southern province of Karnataka be put up for auction and that the process be completed within eight months. The court order would impact even those mines that had restarted production in 2013 after the court had imposed a two-year ban on mining operations in the province. The resumption of mining was on condition of a cap in total production of 30 million metric tons per year (mt/y).

Per the latest court order, only existing consumers of iron ore (sponge iron, pit iron and steelmaking) would be eligible to bid on the 15 mines; investors planning new projects would not be eligible to bid. All of the 15 mines up for auction had been put under “Category C”—considered the worst offenders and violators—by the Central Empowered Committee (CEC), which probed illegal mining in Karnataka and mining leases that were canceled soon after the ban on mining had been imposed.

The court also directed the province’s government to complete detailed exploration to establish definite reserve estimates, put these blocks up for auction, and set the reserve price for the auctions, which would be 35% of the 12-month average iron ore price set by the Indian Bureau of Mines.

In a related development, the Supreme Court directed the CEC to report on utilization of all funds collected through sale of confiscated illegally mined iron ore in the province since the court’s ruling in 2013. The CEC had collected an estimated $1.25 billion through sale of confiscated iron ore, but failed to report any utilization of that fund. The CEC had initially planned to invest in a special purpose fund (SPV) created by the provincial government and spend toward alleviating the impact of illegal mining, but with that deployment of funds failing to materialize, the court directed the CEC to immediately evolve a mechanism that would ensure speedy deployment of the monies toward mitigating those adversely impacted by illegal mining.

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