Iron ore output tumbles 39% to 47 mt in 2014-15

Top iron ore producer Odisha witnessed sharp decline in iron ore production in last financial year as output dropped to 47.35 million tonne (mt), lowest in last 10 years, due to closure of key mines after Supreme Court order in May 2014.

In 2013-14, the production topped 77.84 mt, including the ore produced for captive consumption by the steel plants.

In the last fiscal, the state government had set a target to produce at least 57 mt from the working mines. But following the Supreme Court order last year to shut down the mines which were operating on deemed lease extension, 26 large mines had to halt operation. The combined output capacity of these mines was 35 mt per annum.

Even as the government allowed operation of eight of the closed mines by invoking special provisions mentioned in the rules amid fears of declining royalty soon after the court order, it had estimated that total output would not be more than 43 mt.

In September and October last year, three more mines were asked to stop excavation by the government based on the top court order.

Anticipating losses in mining revenue collection, the state government in November 2014 had requested the Centre to allow mining output enhancement applications of four mines totalling 16 mt as restrictions on productions of large mines resulted in Rs 900 crore deficit in revenue collection compared to the target set for this segment upto October.

Though output went up to 47.35 mt surpassing government estimates, during 2014-15, iron ore despatches recorded by the Directorate of Mines was 52.67 mt. "The despatches include transportation of iron ore inventory carried from previous fiscal," said a government official.

As the government was expecting a drop in iron ore output, it had directed all mining circle heads to encourage lease holders to meet the despatch limit of last financial year set by the steel and mines department. It had estimated around 15 mt despatch by allowing transportation of previous year's stocks.

The government expects production to rise from this year onwards as it is in the process of allowing shut down mines to resume operations based on new Mines Minerals Development and Regulation (MMDR) Act. It has also set up a committee to fix iron ore production target for the current fiscal.