The Supreme Court on Friday allowed export of already-extracted iron ore from Karnataka’s three districts – Bellary, Chitradurga and Tumkar – subject to conditions set by the central government. It also permitted the miners to sell such stocks lying at various mines and stock yards in the three districts of the state, without having to resort to the process of e-auction that was mandated earlier.

The move would benefit firms like Vedanta, SLR Metallics, state-run NMDC and scores of other miners.

“Permission is granted to the applicants (miners) to enter into direct contracts to lift the excavated iron ore through inter-state sales. We also grant permission to export the iron ore and pellets manufactured from the iron ore produced from the mines situated in Karnataka to countries abroad, as is being done in the rest of the country, but strictly in terms of the extant policy of the government of India,” a Bench led by Chief Justice NV Ramana ruled.

The apex court was in “broad agreement” with the Union ministries of steel and mines that it was necessary to create a “level-playing field” for the mines situated in the three districts with others situated in the rest of the country.

“As the Centrally Empowered Committee (CEC) has indicated, the demand/supply and price of iron ore are best left to be determined by the market forces…the time has come to review the system that was put in place over a decade ago, on halting the unchecked excavation of iron ore in the three prime districts in Karnataka. Ever since then, e-auction has been the only mode available for disposal of the excavated iron ore. The said arrangement has worked out satisfactorily so far. The situation that was prevalent in the region prior to 2011 has now changed for the better,” the Bench stated in its order.

“Having regard to the course correction that has taken place, the regeneration post the ruinous damage caused to the environment and the various steps taken by the government,” the order of September 23, 2011, deserved to be relaxed, it added.

It also noted that the consecutive e-auctions conducted by the Monitoring Committee have been receiving a poor response and sale of iron ore even at the reserve price was dismally low. “Looking at the overall change in the outlook, the restrictions placed on the manner of conducting the sale of iron ore and fixation of the sale price need to be removed,” the apex court said in its 24-page order.

However, the top court said that the issue related to lifting of the ceiling limit for production of iron ore in the three districts will be decided in July after getting an opinion from the newly-appointed Oversight Authority, which has been asked to take inputs from the stakeholders, including the CEC and the Monitoring Committee.

During the hearing in this case, the Union government had spelled out its support to resumption of export saying that government’s policy favours iron ore exports and Karnataka should not be excluded from its ambit. Before that CEC, formed by the apex court to oversee sale of iron ore, had also submitted that there was no reason to exclude Karnataka from the benefits of iron ore exports.

However, the Basavaraj Bommai-led Karnataka government had taken a contrary stand by opposing lifting of ban on export of iron ore from the state, saying the rising domestic demand of steel require proportionate iron ore quantity and also unregulated exports would lead to numerous problems.

Even Vedanta, SLR Metallics and PSUs like NMDC had asked the SC to permit the lessees to export or sell iron ore without taking recourse to e-aution as the steel plants and other related industries were not willing to purchase under e-auction or above the prevailing market price.

The Karnataka miners as well as the Federation of Indian Mineral Industries had sought lifting of the ban and doing away with the e-auction mode of sale. But Karnataka Iron and Steel Manufacturers’ Association, which also has JSW as one of the members, had said that exports should be carried out after meeting the requirement of iron ore in the country.

While the stakeholders in the mining industry had backed the lifting of curbs, Samaj Parivartan Samudaya, the NGO, which is the petitioner before the SC, had opposed any such exports on the grounds that minerals being national assets need to be preserved and only finished steel should be exported. It had also stated that exports should not be allowed as there was no surplus of iron ore.

The Supreme Court had in 2011 banned the export of iron ore from Karnataka to check environmental damage in the state and fixed the maximum permissible annual production limit at 35 MMT for the A and B category mines.