Mining body Fimi urges help for Karnataka iron ore extractors

Ore consumers say price cut not enough; Pellet capacities are making losses

With Karnataka iron ore mining companies unable to clear their stocks, the Federation of Indian Mineral Industries (Fimi) is asking the Supreme Court (SC) for permission to export ore pellets.

Its letter informing the Union commerce ministry of this also says purchasers of ore should utilise the commodity produced in Karnataka before procuring from outside the state or importing. And, that any import of ore should also be discouraged, being a strain on Gross Domestic Product, carbon-negative and leading to foreign exchange outflow.

“Capacity utilisation of pellet producers of Karnataka has fallen to 60 per cent, from 100 per cent earlier. It is difficult for them to operate in this business climate,” Noor Ahmed, a mining company official from Karnataka and an ex-Fimi official, told Business Standard.

India has three major iron ore producing regions— Odisha, Chhattisgarh and Karnataka. Iron ore is the key raw material in the making of steel.

Earlier this month, government-owned NMDC reduced ore prices by Rs 300 a tonne in Karnataka, due to the growing stock. IN May, it had raised the price of lump ore by Rs 150, to Rs 3,050 a tonne.

“We have started lifting a small portion of iron ore from Karnataka after NMDC reduced prices but the reduction is not enough,” sources at JSW Steel said. “There is still a gap of Rs 300-400 a tonne between Karnataka and Odisha ore. Given the price of the ore for the (lower) quality it is, we cannot lift big quantities from Karnataka like before,” they said.

Sajjan Jindal’s JSW Steel normally takes 60-70 per cent of the ore produced in Karnataka, to feed its 12-million tonne plant at Vijaynagar in Ballari district.

In December last year, the SC raised the iron ore output cap in Karnataka to 35 mt, from the 30 mt it had imposed in 2011. All the ore produced in the state is only allowed to be sold via e-auction. And, that purchased by pelletisation plants cannot be sent to to other states. The ore also may not be sold to traders. , However, consumers of Karnataka may buy from any other state or import.