Bellary mining ban to leave Rs 600-cr dent

Railway earnings will take a hit of about Rs 600 crore in the wake of Supreme Court’s decision to suspend mining operations in Bellary.

The railways have already scaled down its budgeted target for 115 million tonnes (mt) iron ore loading in 2011-12 by 3.43 mt. The current potential would have to be further scaled down by approximately 10 mt, said a senior ministry official.

The iron ore movement was earlier expected to bring in Rs 9,035.31 crore during 2011-12, forming almost 13 per cent of the overall budgeted freight target of Rs 68,620 crore.

According to senior officials in the Railway Board, iron ore loading from Bellary declined 30 per cent to around 16 mt in 2010-11 from 23 mt in 2009-10. Iron ore from the region, in fact, constituted 17 per cent of the total iron ore loading in 2009-10 but fell to almost 13 per cent in 2010-11. This year from April to June, only 3.25 mt iron ore was loaded from the area.

Efforts will be made to load all other commodities to compensate for the shortfall, according to senior officials in the Railway Board. The district of Bellary produces about 35 mt of iron ore annually, about 83 per cent of Karnataka’s total annual production of 42 mt.

Owing to ban on iron ore exports from Karnataka in 2010, there has been a loss of Rs 1,071.45 crore to the Indian Railways. The earnings from iron-ore exports in Karnataka plunged from Rs 1,770.59 crore in 2009-10 to Rs 699.14 crore in 2010-11.

According to a Comptroller and Auditor General report, “The annual growth rate of loading in the past decade consistently showed an upward trend till 2005-06 after which, there was a decline.”

There was a continuous increase of over 66 mt from 2005-06 to 2007-08, mainly due to gradual increase in permissible carrying capacity of wagons. The increase in freight loading by 6.53 per cent in 2009-10 over the previous year was below the compounded average growth rate of 7.32 per cent achieved during 2000-09.