Steel and iron ore companies in and around the south Indian state of Karnataka may have a little chance to cheer with the news that Supreme Court of India (SC) has allowed the auction of iron ore already lying in stockyards, under the supervision of a monitoring committee, reports Business Standard.
The report claims that hardly 8 million metric tons of iron ore is left for auction in the Karnataka state, which is barely sufficient to run the furnaces of the steel mills in and around the state for two months. In addition, they expect another 2 to 4 million tons of additional ore stored at various stockyards of miners and private traders to be made available if the SC approves auctioning those.
The Court has directed the Indian Ministry of Environment and Forests to “revisit” clearances given in light of the reclamation and resettlement (R&R) program. The Court has allowed Category ‘A’ mines, or mines spread over 50 hectares or more, in Bellari district in southern Karnataka to restart operations after environmental clearance. The SC had earlier granted permission to state-run National Mineral Development Corporation (NMDC) to mine up to a million tons of iron ore per month.
Until last year, India had a surplus of iron ore reversed, but now the country has slipped into deficit because the SC had taken stern action last August to nab illegal mining in Karnataka state.
Shutting down miners’ operations amid threat of government actions has seen a massive cut in iron ore supply, forcing steel mills to look for alternative sources of raw materials.
Karnataka accounted for one-fourth of India’s iron ore output. The state produces 16 million tons of iron and steel in a year, which is a little less than 25 percent of the country’s total production.
The state also produces more than a fifth of India’s total iron ore production, which is around 220 million tons annually. Of this, about 80 percent comes from Bellary-Hospet region at about 40 million tons per year; the Tumkur and Chitradurga districts meet the rest of the requirements.
Except NMDC, which is already permitted to mine a small amount of 1 million tons every month, no other company is currently operating their mines in the state.
Due to the shortage and ban on iron ore mining in three Karnataka districts — namely Bellary, Tumkur and Chitradurga — the steel industries in Karnataka are not able to run smoothly.
Due to the acute shortage, most of the plants got shut down and those that are running are operating on much lower capacity than actually they operate.
Leading steel companies including JSW Steel and Kalyani Steel are in dire need of the key raw material.
JSW sources 40 percent of its iron ore requirements from NMDC, but the balance is bought from private miners in Karnataka. So, the resumption of the mining would enable the company, among other firms like Essar and Ispat, to source ore from Karnataka miners.
The Court, while banning the mining, had permitted auction of 1.5 million tons of iron ore per month through the e-auction route from the stock of 25.88 million tons, lying at the mines in the state. The CEC (Central Empowered Committee) has recommended to release 1.5 million tons of iron ore through e-auction, which had been approved.
As per court directives, the material release on eAuction will not be permitted for export. It will only available for the domestic steel industries.