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India's NMDC halts operations at key iron ore mine after state government order

Jatindra Dash and Sudarshan Varadhan
·2-min read

By Jatindra Dash and Sudarshan Varadhan

BHUBANESWAR/CHENNAI, India (Reuters) - India's NMDC Ltd said on Friday it had temporarily suspended operations at a key iron ore mine in Chhattisgarh after the state government ordered it to do so.

NMDC chairman N.Baijendra Kumar told Reuters he was unsure why Chhattisgarh had instructed it to halt operations. The 6 million tonnes per annum Becheli mine is NMDC's largest, accounting for nearly 40% of its annual production capacity.

"They gave oral instructions to stop operations. We do not know what exactly is in their mind. We are waiting for their written instruction," he said.

Chhattisgarh has accused NMDC, which is run by the federal government, of diverting corporate social responsibility money owed to it to Prime Minister Narendra Modi's coronavirus fund, Reuters reported last month, citing a letter sent by the state's chief minister.

It also said in the letter that the iron ore miner has not paid penalties of more than 10 billion Indian rupees ($130 million) over alleged violations and it was not keeping up with its commitments that include a housing scheme.

The Chhattisgarh government is run by the Congress party, the main opposition to Modi's Bharatiya Janata Party.

NMDC's Kirandul mine in the same region was operating normally, a company spokesman said.

Shares of NMDC, which have fallen by nearly a third this year, were 1.4% lower in midday trading on Friday.

The company has also seen output hit after operations at the 4.5 MTPA Donimalai mine in Karnataka were halted in 2018 due to tensions with the state government.

($1 = 75.8371 Indian rupees)

(Fixes typo in company name in paragraph six)

(Reporting by Jatindra Dash in Bhubaneswar and Sudarshan Varadhan in New Delhi; Editing by Edwina Gibbs)