Iron ore production yet to pick up in Karnataka

One year after the Apex Court allowing opening of 115 mines in category A and B, the production has barely touched 20 million tonnes

Normalcy in iron ore production is yet to be restored in Karnataka a year after the Supreme Court ordered for reopening of all mines under Category A and B.

Of 115 mines, only 23 mines, besides two leases of state-owned National Mineral Development Corporation (NDMC) Limited, have resumed production. This will be enough to meet only half  the steel industry’s iron ore requirement.

On April 18 last year, the apex court had allowed reopening of all mines subject to statutory approvals that include clearance from Indian Bureau of Mines, the Union environment ministry, state pollution control board and the Central Empowered Committee (CEC) of the SC. However, till now, only 25 mines have secured clearances, of which two leases had to shut down operations due to expiry of their leases.

Currently, as against the steel industry’s requirement of 36 million tonnes (mt) per annum, the total production of iron ore from 23 operational mines is barely 19-20 mt. This includes production from NMDC.

“The steel industry in and around Karnataka requires about 36 mt of iron ore per annum and till now, we have seen production touching hardly 19 mt. We are forced to outsource the ore from other states such as Odisha, Chhattisgarh and Jharkhand, by paying a huge amount on logistics,” said Vinod Nowal, deputy managing director, JSW Steel.

After assessing the extent of illegalities conducted by all the 166 mining leases, the survey team appointed by CEC classified mines into three categories, A, B and C, depending on the extent of illegalities. The apex court ordered cancellation of leases under the C category. It had also capped the production at 30 mt per annum (25 mt in Bellary and five mt in Chitradurga and Tumkur).

Category A comprises 45 mines, Category B has 70 mines and Category C has 51 mines. At the peak of mining in the state, all these produced about 50 mt in 2008 and 2009.

However, till now, only 23 mines are operational, with a combined output of 10 mt. NMDC with two leases is producing another nine mt per annum.

According to Federation of Indian Mineral Industries (Fimi), which assisted the Dehradun-based Indian Council of Forestry Research and Education (ICFRE) in preparing the detailed reclamation and rehabilitation (R&R) plans for all the mines, another eight-ten mining leases with an additional capacity of three mt per annum are likely to start production during FY15. If they reopen, the production could go up to 22 mt by end of March 2015.

“The Fimi has completed the process of preparing the R&R plans for 98 mines and submitted to ICFRE. We expect another eight-ten mines to restart production during this year, so that the production could be increased to around 22 mt,” said a senior Fimi official.

Meanwhile, the SC is hearing the matter pertaining to the Karnataka government’s affidavit for allowing it to continue the e-auction process.

“We are waiting for the next hearing in the SC. We have verbally requested the CEC and the court to continue the e-auction process until the production reaches 30 mt in Karnataka,” said Nowal.

The e-auctions have been going on since September 2011 and till end of March 2014, 69 mt of iron ore has been sold. In 2013-14, 28.35 mt ore was sold, which includes dumps and freshly produced ore.