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Mining industry body FIMI has termed today's Supreme Court order of cancelling all the 49 leases in category C mines in Karnataka as "too harsh" and indicated that it may seek a review of this part of the order.
Besides, it said the iron ore supply situation in the state will ease only to a limited extent in the immediate future and only about 10 million tonnes (MT) of ore would be available in the market.
FIMI Secretary General R K Sharma told PTI that out of a total 93 mines in Category-A and B, only about 50-60 mines will get operational due to stringent conditions and other regulatory issues. "It will lead to production of around 10 MT iron ore only."
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Sesa Goa -- one of the beneficiaries of today's apex court order as its mine was in category B and got permission to operate -- declined to comment on it, saying "it is yet to receive the order".
Meanwhile, Sharma said: "We welcome the judgement in respect of Category-A and Category-B but the judgement on Category-C of closing them and auctioning them is too harsh. These mines have remained closed for about 2 years.
"FIMI had suggested (to the apex court) that these mines should be allowed to function, pay the penalty as was paid by the leaseholders of Category-B mines and meet the other conditions. This has not been accepted by the Supreme Court."
He added that "we will get in touch with our lawyers to find out whether we can approach the court for a review but this has not yet been decided. Let's read the judgement first."
The Supreme Court has cancelled 49 leases in mines reporting maximum illegalities in Bellary, Tumkur and Chitradurga districts of Karnataka, but allowed resumption of activity in mines with lesser illegalities as recommended by a Central Empowered Committee.
The CEC had categorised the mines in the area in three categories -- A, B and C. The mines in which there was least or no irregularities were categorised as 'A' and those with maximum illegalities were placed in category 'C'.
Of the 166 mines that were banned by the apex court during July-August, 2011 due to environmental degradation of the areas, 21 were in Category-A, 72 in Category-B and 49 in Category-C. Balance 24 mines were already non-working.
The lease holders of category-A and B mines will now have to meet the conditions related to the reclamation and rehabilitation (R&R) programme, which was suggested by the CEC and accepted by the apex court, to reopen their mines.
The CEC had also put an upper ceiling for all mines in Karnataka and had fixed the maximum iron ore production in the state at 30 MT per year. Last year, the apex court had also given a partial relief to the industry and had allowed 18 Category-A mines to operate. However, only 7-8 mines have become operational till date.
Sharma said that most of the mine owners will find it
difficult to meet the R&R conditions or will not be able operate at reduced capacities as it will be economically unviable for them.
"Many mining lease holders in the state need to apply for renewals of either mining lease or forest clearance or environmental clearance, which got expired in last 2 years
"Then there are strict R&R conditions and the upper ceiling on production. So not more than 50-60 mines will become operational. This will lead to availability of only about 10 MT iron ore in a year and not 30 MT, the upper limit put by the apex court," he said.
Steel makers in Karnataka which used to produce about 17-18 MT every year before the ban, have been facing severe iron ore crunch due to the mining ban.
Most of the producers, including JSW Steel, which is the largest producer in Karantaka with a 10 MT in a year capacity, have been running their plants at a reduced capacity due to the iron ore shortages as stocks were limited, while the quality was lower.
Due to iron ore crisis, JSW Steel had operated its Karnataka plant at 80 per cent capacity in the last fiscal and had produced 8.51 million tonnes of steel.
Iron ore, one of the most important raw material required to produce steel, has been sold in the state through e-auction route.
