SC orders suspension of mining in Bellary

The Supreme Court on Friday dealt a blow to illegal mining by ordering suspension of all mining activities in Karnataka’s Bellary district with immediate effect.

The order will affect about 100 iron ore mining leases covering 10,686 hectares. It follows a ban on mining iron ore a few months ago that had hit 40 lease holders.

Friday’s order will lead to suspension of mining in 80 per cent mines in the state. Karnataka produces 45-50 million tonnes iron ore annually, close to one-third of the national output. Bellary accounts for 80 per cent of the state’s output. The state is the second-largest producer of iron ore after Orissa.

Friday’s order, passed by a Forest Bench headed by Chief Justice S H Kapadia, was the result of a report of the Central Empowered Committee appointed by the Supreme Court to look into the allegations of illegal mining damaging the environment of the region. The committee reported rampant illegal mining and widespread ecological devastation in the area.

“This is an extreme step. It is very unfortunate for miners, who will have to sustain ‘unimaginable and insurmountable’ losses. This will lead to large-scale unemployment and social unrest in Karnataka’s mining belt,” said Basant Poddar, managing director, Mineral Enterprises.

Karnataka accounts for close to 30 per cent of the national steel output. The ban would lower the nation’s steel production, said steel industry sources.

For 2011-12, the steel and pig iron industry has indicated a requirement of 45 million tonnes iron ore. Among the companies that will be hit is JSW Steel, which operates a 10-million-tonne-per-annum steel plant at Toranagallu in Bellary district. It requires around 27 million tonnes iron ore in 2011-12. However, with suspension of mining by 40-odd companies, the supply has already dropped to 24 million tonnes from 50 million tonnes. JSW may have to shut down its blast furnaces. Normally, the company has an inventory for a month. “The shutdown will be a disaster as restarting the furnace will take about a month,” said a company source.

“As it is unviable to import iron ore from places like Orissa, steel companies in Karnataka will have to shut operations until mining in the state is restored,” said D V Pichamuthu, director, Federation of Indian Mineral Industries.

Other major steel producers in Karnataka are Kalyani Steels, Sathavahana Ispat, BMM Ispat, Kirloskar Ferrous and Visveswaraiah Iron and Steel Ltd.

The Supreme Court has also asked the Ministry of Environment and Forests (MoEF) to prepare an interim report on iron ore requirements of the country’s steel industry. MoEF has also been asked to estimate the iron ore required by the domestic industry. After assessing the damage, the court might take further action to make the “pollut-ers pay”, a principle devised by it some time back.

The Supreme Court has also dealt with the iron ore companies’ plea for permission to export. Last week, the court refused to interfere and asked the companies to move the state government for appropriate orders.

According to the expert committee report, over 90 per cent forest area in the district has become highly degraded due to indiscriminate mining.

The Supreme Court order will also hit the state government, which earn-ed Rs 755 crore from iron ore royalty in 2010-11.

During 2010-11, the state and the Centre lost an estimated Rs 10,000 crore by way of excise duty and valued-added tax as a result of the ban on export of iron ore. The ports lost an estimated Rs 500 crore.

The railways were one of the worst sufferers. They lost Rs 2,100 crore reve-nue from the iron ore industry due to the exp-ort ban.