If More Mining Allowed, Indian Steel Companies Hope For Full Steam Ahead

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Ferrous Metals

As a follow-up to some of the points made in a MetalMiner article on JSW Steel earlier this week, India’s steel industry as a whole, starved of a large portion of domestic iron ore supply, is waiting for that one last nod by a high-powered committee before it can break out into a celebration.

(It seems India is always waiting for its myriad committees to decide on things.)

If the Central Empowered Committee (CEC), appointed by the highest court of the land, the Supreme Court, gives its go-ahead to a decision by the local government to re-open eight mines in the southern state of Karnataka, about 5.5 million tons of ore will get pumped into the system, giving the sector fresh impetus.

Of this, about 2.5 million tons will be contributed by mining major, Sesa Goa. While the industry expects the go-ahead any day, the mines are most likely to open either by July’s end or the first week of August.

The “A” category mines have committed the fewest transgressions on forests, and are most likely to fulfill all the Reclamation & Rehabilitation measures before resuming operations.

For the last year, India’s steel industry has been staring in the face of a supply crisis following a ban on mining by the Supreme Court, in the wake of irregularities unearthed by authorities. Steel companies have been hampered by inadequate supplies of quality ore at reasonable prices, one of the factors contributing to the subdued output of steel in India. Steel companies such as JSW Steel, Tata Metalinks and Kalyani Steel were operating at less than full capacity because of this.

A report in The Business Standard on a conference on mining in Bangalore quoted H.R. Srinivasa, the director of the Department of Mines and Geology in Karnataka’s government, as saying that the reclamation and rehabilitation plans for the eight “A” class mines had been cleared by the government. The final approval was now awaited, and could come anytime soon.

He added that CEC approval permitting, more mines would be allowed to restart their operations, which could take the total iron ore production in the state to 10 million tons per year by the end of the current fiscal year.

The Karnataka Government also filed an affidavit with the CEC to allow mining of an additional 12 million tons by “B”- and “C”-class leaseholders in the state. This would be over and above the production figures of state-owned National Mineral Development Corporation (NMDC), which was the only miner to be given permission by the Supreme Court to operate. NMDC produces about 10 million tons of iron ore per year. Prior to the mining ban, Karnataka’s iron ore production was about 25 million tons.

In April this year, the Supreme Court had partially lifted its ban on iron ore mining in Karnataka. It was lifted for a certain category of mines under strict conditions. The Court also allowed the auction of iron ore already lying in stockyards, under the supervision of a monitoring committee.

Sohrab Darabshaw contributes an Indian perspective on metals markets to MetalMiner.

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