Key minerals output slips to historical lows

Due to stricter norms and restrictions in mining operations, iron ore and chromite ore production in the state has dipped significantly in 2010-11 to the level which is lowest in the past 15 years, says the data provided by the state steel and mines ministry.

Between April and January in 2010-11, the state produced 4 million tonnes of iron ore and 8.5 lakh chromite ore, according to the activity report of the state mines ministry. In 2009-10, iron ore production in the state stood at 79.06 million tonnes while chromite ore output was 3.4 million tonnes.

The 2010-11 production levels are even behind the official target, which was set at lower than the previous year’s target. For 2010-11, the Orissa government had projected 7.7 million tonne iron ore and 1.3 million tonne chromite ore production.

The projection figures were further scaled down to 5.2 million tonne and 1 million tonne, respectively.

The production shortfall has affected exports from the state, which is India’s third biggest exporter of iron ore. Iron ore exports through Paradip port declined by 14.3 per cent in 2010-11, port data showed. Steel makers in the state have threatened to shut down their plants in near future, if the government does not take steps to increase iron ore availability and announce a bailout package.

The state is the largest producer of iron ore and chromite ore in the country. After reports of irregularities in mining operation in 2009, the state government slapped severe restrictions and tightened raising conditions of minerals.

The government took a series of measures to prohibit illegal mining ranging from issuing new transit passes to detecting mine boundary by digitalised maps. Almost half of the state’s 600 odd mines are shut since then and their operations suspended.

Surprisingly, the state’s mining revenue from mining sector has soared during 2010-11 despite the production fall. The state collected Rs 2,863 crores as royalty fees during Apr-Feb period of 2010-11, much higher than Rs 2,020 crores collected in 2009-10.

Sources said, this surge is mainly because of switching to the system of collection of royalty on iron ore from tonne basis to ad-valorem basis and collection of huge penalties and other levies.