Light at end of the tunnel with SC order

Various legal hurdles still for permitted mines to resume operations but pall of gloom on the sector seems to have lifted; about 15 mt of supply possible in FY14

The darkness that had enveloped the iron ore mining industry in Karnataka seems to be dissipating with the Supreme Court order of yesterday, ordering resumption of full-fledged operations after a gap of 20 months, with as many as 110 mining companies set to resume operations. The ore-starved steel industry can look forward to steady supply.

Subject to fulfilment of the statutory norms, some mines from both the A and B categories are together expected to resume work and bring 15-16 million tonnes (mt) of iron ore to the market in a year's time, sufficient for about half of the steel industry's requirement annually. Mills in Karnataka, which contribute about 24 per cent of national output, require about 36 mt of ore yearly.

However, 49 mines in Category-C will cease to exist, as the court has ordered their closure on the grounds of large-scale illegalities. The court has also ordered suspension in the case of seven mines in Category-B on the boundary between Karnataka and Andhra, for which survey sketches have not been finalised. (STATE OF MINING IN KARNATAKA)

There are 166 mining leases in Karnataka inspected by the Joint Survey Team constituted by the Central Empowered Committee (CEC) of the SC. After assessing the extent of illegalities in all, the team classified mines into A, B and C categories, depending on the extent. A had 45 mines, B had 70 and C had 49. At the peak of mining in Karnataka, all these mines produced about 50 mt, in both 2008 and 2009.

Till now, the CEC has approved reclamation and rehabilitation (R&R) plans for 57 mining leases, of which 25 are from Category-B, including Sesa Goa, MSPL, MML, MEL and SKME.

It is expected that some mines from both categories together could produce eight to nine mt in the next one year, i.e. by the end of March 2014. This means the steel industry can look forward to 15-16 mt of ore in 2013-14, which includes about eight mt from central government-run NMDC, which is already allowed to produce up to one mt a month.

In September 2012, the apex court allowed 18 mines in Category-A, whose R&R plans were approved, to produce about 8.02 mt of ore annually. However, one of these was not willing to obtain the statutory approvals and the other five were not eligible to restart due to other cases pending against them. The other 12 can restart as and when they get all the approvals and eight mines have started producing. Together, these can bring 4.6 mt of ore to the market.

In Category-B, the CEC has approved R&R pans for 25 companies, which together could produce four to five mt, provided they secure other statutory approvals.

For 2014-15, production is likely to go up to 25 mt and reach 30 mt in 2015-16, provided most mines in A and B secure all approvals and resume. Many are awaiting lease renewals.

For the time being, those in C will stand to lose their leases. As and when these are reauctioned, the combined ore production will still be at 30 mt, says the CEC report dated March 13, 2012. The production from all mines has been capped at 30 mt in Karnataka by the CEC - a 25 mt ceiling from all the leases in Bellary district and five mt from those in Chitradurga and Tumkur districts together.