SC lifts ban on mining, but not much for steel industry to cheer

The steel mills might have to wait for six months at least as 12 of the 18 mining leases still need to secure statutory nods

The removal of ban on iron ore mining in Karnataka as directed by the Supreme Court on Monday is unlikely to bring immediate relief to the ore-starved steel industry. The steel mills might have to wait for up to six months at least to normalise their operations as 12 of the 18 mining leases in Category A still need to secure several statutory approvals before starting their productions.

The Supreme Court on Monday lifted ban on iron ore mining in Karnataka and allowed 18 Category A mines to resume mining subject to certain conditions.

While 12 mines can restart mining as and when they secure all statutory approvals, one mining lease is not willing to obtain approvals and five others cannot start as some other cases are pending against them in the court. Other 12 mines can produce about 4.5 million metric tonnes per annum as per the R&R Plans approved by Central Empowered Committee (CEC).

Presently, only one mining company has all the statutory approvals in place. It can produce about 380,000 metric tonnes per annum as per the revised mining plan. Another two mines with a combined capacity of 940,000 metric tonnes are expected to obtain pending approvals within one month. Another five companies would secure all approvals within the next two months and have a combined capacity of 2.31 million metric tonnes.

Companies like JSW Steel and Kalyani Steel are currently operating at 80% and 40% capacity respectively. It would take at least three to six months for the mining companies to bring iron ore to the e-auction platform in the state.

“It is not a healthy situation for us at present. We are operating at 40% of our capacity (700,000 tonne per annum plant) with a raw material inventory sufficient for another three weeks. Going by the current indications, we can not expect normalization of production in the next six months to one year depending on how mines restart their operations,” R K Goyal, managing director, Kalyani Steel said.

JSW Steel, which operates an 11 million tonne per annum steel plant at Toranagallu in Bellary district, is presently working at 80% of its capacity. It has stock for about one month and is largely banking on opening up of mining in the state.

“We have enough stock reserve but the ore quality is pathetic. E-auctions are happening regularly but below our expectations. NMDC’s production has also not improved beyond 700,000 metric tonnes per month. With the opening of mining, we hope at least 4-5 million metric tonnes would be available in the next few months,” JSW sources said.

The installed steel capacity in Karnataka is around 17 million tonnes per annum and the industry requires about 30 million tonnes of iron ore per annum. Presently, the industry is operating with ore coming from the electronic auctions. With the opening of mining, it can expect about 4.5 million metric tonnes over the next one year. To begin with, only one mine, Mineral Enterprises Limited (MEL) has all statutory approvals in place and is likely to restart on Wednesday.

“We have to submit some more affidavits to the Supreme Court and agree to the conditions put forth by Central Empowered Committee. Only after the court accepts our undertaking we can start the mining. Our lease expires in one month’s time and we can produce about 200,000 metric tonnes and put it for auction in 15 days,” Basant Poddar, Managing Director, MEL said.