You are here: Home » Markets » Commodities » Other Commodities
Business Standard

Iron ore mining ban in Odisha likely to hit captive miners

Dilip Kumar Jha  |  Mumbai 

If the M B Shah Commission's proposal for a complete ban on iron ore mining in Odisha is implemented, it may result in a fall of 11 million tonnes (mt) in the combined captive iron ore output of Steel Authority of India Limited (SAIL) and Tata Steel.

Earlier, iron ore mining was banned in Goa, after it was found norms related to the environment had been violated.

The commission is finalising its recommendations on irregularities in iron ore mining in Odisha. If the commission suggests a blanket ban on mining, SAIL would lose four mt of captive iron ore output, while Tata Steel would lose seven mt of iron ore a year.

An industry official, however, said he didn't think iron ore mining would be banned in the state.

A report on iron ore mining by EmKay Global Financial Services showed for Tata Steel's current production capacity of 9.7 million tonnes per annum (mtpa), the company needed about 17 mtpa of iron ore. Currently, its iron ore requirements are partly met by supplies from Noamundi and Joda (East) mines in Jharkhand and Odisha, respectively.

In its report, EmKay said if captive mining was suspended indefinitely, Tata Steel would see an iron ore shortage of about seven mt, and this might force the company to operate only at about 60 per cent utilisation. Also, as iron ore for the company's six-mtpa steel plant being set up Odisha is likely to be supplied from the Khandband mine (Odisha), a ban might delay the project.

If captive miners are forced to discontinue mining, operations at SAIL's steel mill in Rourkela would be hit. Though the company has mines in adjoining Jharkhand, it would have to pay high costs to transport iron ore from there.

The impact on the industry would be severe, owing to a likely investigation, intervention by the Indian Council of Research & Education, preparation and implementation of a rehabilitation and resettlement study, among others. It is likely it would take at least a year for the issue to be resolved.

This would result in a 45-mtpa shortage of iron ore for 20-25 mt steel and pellet plants in the eastern region. While Chhattisgarh-based units would have a choice to source iron ore from NMDC, units in West Bengal and Odisha would find it difficult to continue operations.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, June 05 2013. 22:33 IST