Delay in statutory approvals cripples Karnataka's mining industry

Despite the Supreme Court allowing resumption of mining in Karnataka this April, only a dozen mines have managed to resume till now. Around 25 are still awaiting various approvals from the authorities. The delay is crippling both the mining and steel industry in Karnataka. As things stand, the steady supply of iron ore seems far away.

"These mines would take at least another three months to one year to secure all approvals before starting operations," said officials in the Federation of Indian Mineral Industries.

Following allegations of rampant illegal mining, the apex court had in August 2011 banned mining in Karnataka. After various rounds of hearing, the court through its April 18 order allowed resumption by 117 mines in categories A and B. Forty-nine leases in Category C mines, found to be flouting norms, were cancelled. Since the April order, only about 10 companies from Category A and two from Category B have resumed.

These mines, which include NMDC as well, produce about one million tonnes of iron ore a month, which is barely 40 per cent of the steel industry's requirement. The steel industry requires about 2.5 million tonnes every month to operate at full capacities. While NMDC produces about 700,000 tonnes a month, the remaining companies add another 300,000 tonnes in a month.

JSW Steel, Kalyani Steel, and BMM Ispat, among others, are still operating between 60 per cent and 80 per cent of their installed capacities due to shortage of ore. A large number of sponge iron manufacturing units have shut operations, as they cannot afford to buy iron ore at e-auctions.

The 25-30 companies awaiting statutory clearances have already secured the Reclamation and Rehabilitation (R&R) Plan, which is a prerequisite to seek other approvals. Till date, R&R Plans for as many as 57 mines have been prepared and approved. This includes 29 in Category A and 28 in Category B.

However, they are yet to receive several other approvals such as Mine Plan by the Indian Bureau of Mines, State Pollution Control Board, forest clearance and no-objection certificate from deputy commissioners in respect of mine lease area located in a revenue land, among others.

On other hand, companies such as Sesa Goa, Mineral Enterprises and Kariganur Mineral Mining Industry are waiting for renewal of their leases, which have expired.

"Despite submitting renewal applications well within the prescribed time limit, all the applications were kept pending by the Karnataka government. It only started processing after the apex court clarified it had never imposed a ban on processing of renewal applications. However, this process is progressing very slowly," said industry sources.

As a result, as much as 10-12 million tonnes of iron ore will not be available in the market. The loss to the state exchequer is in the range of Rs 1,500-1,800 crore on an annualised basis. The cumulative loss to the central and state exchequers is Rs 3,500-4,000 crore over the two years since the closure of mining in August 2011. The August 2011 order had forced a shutdown of iron ore mining in Karnataka and rendered about 400,000 persons jobless in mining, steel and ancillary industries such as logistics.

DRILLING DEEP
Total mines : 166
Category A : 45 (18 mines were approved in September 2012; 8 have started production) Remaining mines were also allowed to produce on April 18, 2013

Category B : 72 (7 mines on inter-state boundary suspended as their survey sketches not finalised) Rest of the mines will start production in about six months subject to approvals

Category C : 49 leases have been cancelled. Karnataka government is asked to re-auction these mines