Supreme Court's decision to allow partial mining brings relief to industry
On the sidelines of the annual World Bank and IMF meetings in Washington, the Finance Minister acknowledges that the government's success will depend on its ability to take coalition partners along.
The Supreme Court decision to allow partial mining in Karnataka has provided some relief to the local iron and steel industry that produces about 16 million tonne (MT) of metal alloy in a year.
"It will certainly help us, we can now expect some good quality iron ore but let the mining restart first. Final judgement has not yet come," said a top official of a steel company that has shut down its plant in the state for want of iron ore.
Meanwhile, Federation of Indian Mineral Industries (FIMI) secretary general R.K. Sharma said, "As and when the mining begins, this would certainly alleviate to some extent scarcity in iron ore supply for domestic steel sector."
He, however, declined to comment further by saying that the matter is still sub-judice. Last Friday, the apex court accepted the recommendations of court-appointed Central Empowered Committee (CEC) that suggested allowing mining in Category-A mines -- that have more than 50 hectares area -- with certain conditions, including Reclamation and Rehabilitation (R&R) plan in place. The final judgement on the issue is yet to be delivered.
The conditions include every individual mine owner giving an undertaking to strictly comply with the provisions of the R&R plan, keeping within the permissible annual production set by CEC and not extending mining into unbroken forest areas.
According to an industry official, 5 million tonne of iron ore can get produced, when mining restarts in Karnataka.
"Roughly we can expect 5 MT iron ore production in a year, when mining resumes in the state. However, the resumption would take some time as R&R plan would have to be prepared and approved," an industry official said.
According to a top official of a leading sponge iron manufacturing firm operating in Karnataka, "Roughly it should take about 4 to 6 months to prepare and get approval for the R&R plan. So, mining can restart only then, only preparatory work will begin at the moment."
The multi-crore iron and steel industry in the state is witnessing a drastic fall in production due to supply of poor quality iron ore, as a fallout of ban on mining in the state since August last year, sources said.
According to them, most of the iron ore from the stock of 25 MT has been auctioned and remaining ore has big presence of alumina, silica and manganese, which can not be removed and has led to fall in production.
They added that the companies are not willing to risk their investments on plant and machinery due to inferior quality of the iron ore and are keeping their production low, although did not quantified the fall in iron and steel production.
JSW Steel, the largest producer of the metal alloy in Karnataka with 10 MT capacity, is running its blast furnaces at 60-65 per cent capacity due to poor quality of ore.
According to the last available data, company's production in February had gone down by over 24 per cent compared to January levels.
Karnataka produces about 16 MT steel in a year, amounting to more than 20 per cent of the country's total output.
The companies in the state require about 104,000 tonne of iron ore daily to run their units. Before the ban, the state used to contribute more than a fifth of India's total iron ore production, which is around 220 million tonnes annually.
Last year, the apex court, through its various orders had put a blanket ban on mining in Karnataka due to environmental grounds.
Later, it provided some relief to the industry, by allowing sale of 25 MT of iron ore, lying at various mines in the state, through e-auctions.
Besides, it had also directed state-owned NMDC to sale 1 MT of the raw material per month to the industries in the state, through its two mines -- Donimalai and Kumaraswamy.