Karnataka govt flouted norms in mine allocation, alleges steel sector

Steel industry wants the state to adhere to guidelines on mine allocation

The steel sector has taken exception to the Karnataka government’s recent recommendation of a fresh iron ore mining lease to MSPL, alleging guidelines weren’t adhered to in the process. The Indian Steel Association (ISA), an apex body of manufacturers, including SAIL, JSW Steel, Tata Steel, Essar Steel, JSPL, Bhushan Steel and RINL, has sought the Union steel ministry intervene in the matter and ensure proper distribution of natural resources by state governments.

On October 30, the mines ministry had issued new guidelines on allocation of mineral resources to user industries. In a representation to steel secretary Rakesh Singh, the ISA urged state governments adhere to these.

According to clause 11.3 (e) of the guidelines, a state government is expected to take note of the end-use of the mineral by the applicant. The clause stipulates state governments allot mining leases only for captive use and capacity enhancement.

 

On November 5, the Karnataka government sent a recommendation to the mines ministry for allocation of a mining concession to MSPL for 204 hectares at the Haddinapadu mines in Sandur taluk of Bellary district. MSPL already owns about 700 hectares of lease area and is engaged in extraction and sale of iron ore in the open market. It also operates a 1.2-million tonnes a year pellet plant.

Recently, the Karnataka Iron and Steel Manufacturers’ Association had written to Prime Minister Narendra Modi, seeking his intervention in the matter. The steel sector’s objection to the state government’s move comes in the wake of an acute shortage of iron ore in the country, especially in Karnataka. The steel sector in the state requires about 40 million tonnes (mt) of iron ore a year, while the amount available this year is 21 mt. Most mills are working at 50-80 per cent capacity. Steel plants in the state are being forced to source iron ore from other states, as well as foreign countries.

“The prime minister’s ‘Make in India’ goal can be realised and 300 mt of steel production can be achieved by 2025-30, only if natural resources are allocated for captive use of end-users,” the ISA said.