Iron ore supply unlikely to improve in Karnataka

SC panel declines to endorse steel industry appeal for raising output cap on existing mines; says state govt should hasten lease approvals

The ore-starved steel industry in Karnataka is unlikely to see higher supply in the near future.

The Central Empowered Committee (CEC) of the Supreme Court (SC) has not endorsed the industry’s appeal for a temporary increase in the permissible annual production from mines with leases. It has also opposed the state government's similar appeal, for raising the production cap from 30 million tonnes a year (mtpa) to 40 mtpa.

The Supreme Court is likely to hear a related tomorrow.

At present, only 18 mtpa of iron ore is available, as against the industry requirement of 40 mtpa. Of 115 category-A and B mines, only 21 have resumed production till now, with output of 9.7 mtpa. Adding central government-run NMDC's production of 8.5 mtpa, the total output in Karnataka is 18-19 mtpa, leaving a shortage of a nearly equal amount. CEC, in a report to SC on January 17, said if the existing directions of the judges and the applicable Acts/rules were expeditiously followed, it would be feasible in the near future to meet the ore requirement of steel and allied industries.

The Karnataka Iron and Steel Manufacturers’ Association (Kisma) had filed an affidavit in SC on August 27, 2013, with an appeal for a direction to the state government to expedite preparation of the reclamation and rehabilitation (R&R) plans immediately and complete the process of cancellation and auction of the category-C mining leases. It had also appealed to the court to direct the CEC for time-bound disposal of applications by individual lessees for enhancement of production capacity.

CEC had said it was for the state government to hasten the processing of applications. “A large number of mining leases with approved R&R plans have not become operational due to lack of statutory approvals and delay in decisions such as processing of proposals seeking approvals under the Forest (Conservation) Act, for lease renewal and temporary working permissions. If SC’s directions regarding allotment of areas of cancelled category-C leases are complied with expeditiously by the Karnataka government, a substantial increase in the availability of ore will take place,” it said.

It said the state government should streamline the procedure for grant of working permission for leases eligible to continue operating. As supply of ore is unlikely to improve substantially in the near future, Kisma has petitioned Prime Minister Manmohan Singh, Congress President Sonia Gandhi, Vice-president Rahul Gandhi, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Union Steel Minister Beni Prasad Verma.

To increase the supply, Kisma suggested the 21 operational mines and NMDC together be allowed to produce 30 mtpa until other mines wereopened. When the rest open, the production from the former could be scaled back.