Tuesday, 26 Jul 2011 | sourced ET
Last week, when Sesa Goa cut its revenue guidance for the current fiscal year due to tight ore supply from Karnataka, it spoke volumes about production problem at one of the largest mineral producing states of the country.
Karnataka, which accounts for a third of India's iron ore output, had to suspend operations in about 50 mines affecting supplies to a host of steelmakers and prompting large players such as JSW Steel and TATA Metaliks to consider a stoppage in production.
The shuttering of the mines followed a survey by a court appointed panel that found most of these mines, owned by private owners, operating without clear boundary sites, encroaching on forest land and dumping mineral waste outside their mines. This was in addition to an earlier directive by the state government to ban exports.
The closure has led to uncertainty about supplies of about 40 million tonnes of iron ore that comes from the region. Karnataka supplies iron ore to severalsteel plants such as JSW Steel, TATA Metaliks, Jindal Saw, Kirloskar Ferrous Industries and Kalyani Steel.
In his representation to the Karnataka government, Mr Vinod Nowal CEO of JSW Steel said that as the company's daily iron ore requirements is 53,000 tonnes and the company has stock of only 150,000 tonnes, operations at the plant could likely be stopped.
TATA Metaliks, the largest producer of foundry grade pig iron which supplies to automobile and engineering companies, said the closure notices issued by the department of mines and geology is ultra vires the Supreme Court order dated May 6th 2011, which did not stipulate stoppage of mining activities.
Mr Sudhin Mitter vice president wrote to Central Empowered Committee chairman Mr PV Jayakrishnan that "Iron ore has no substitute for the production of pig iron and our stock level will last for a very short period. The abrupt closure of mining in Bellary will result in complete stoppage of production at the plant.”
According to the Federation of Indian Mineral Industries, iron ore shipments from India, the world's third largest exporter of the mineral, will fall to 64 million tones in the current fiscal year. Karnataka has 9 billion tonnes of reserves accounting for nearly 38% of India's deposits. The crackdown on illegal mining has come at a time when Karnataka has emerged as a much sought-after location for major global steel sector companies planning to make inroads into India.
Last week, when Sesa Goa cut its revenue guidance for the current fiscal year due to tight ore supply from Karnataka, it spoke volumes about production problem at one of the largest mineral producing states of the country.
Karnataka, which accounts for a third of India's iron ore output, had to suspend operations in about 50 mines affecting supplies to a host of steelmakers and prompting large players such as JSW Steel and TATA Metaliks to consider a stoppage in production.
The shuttering of the mines followed a survey by a court appointed panel that found most of these mines, owned by private owners, operating without clear boundary sites, encroaching on forest land and dumping mineral waste outside their mines. This was in addition to an earlier directive by the state government to ban exports.
The closure has led to uncertainty about supplies of about 40 million tonnes of iron ore that comes from the region. Karnataka supplies iron ore to severalsteel plants such as JSW Steel, TATA Metaliks, Jindal Saw, Kirloskar Ferrous Industries and Kalyani Steel.
In his representation to the Karnataka government, Mr Vinod Nowal CEO of JSW Steel said that as the company's daily iron ore requirements is 53,000 tonnes and the company has stock of only 150,000 tonnes, operations at the plant could likely be stopped.
TATA Metaliks, the largest producer of foundry grade pig iron which supplies to automobile and engineering companies, said the closure notices issued by the department of mines and geology is ultra vires the Supreme Court order dated May 6th 2011, which did not stipulate stoppage of mining activities.
Mr Sudhin Mitter vice president wrote to Central Empowered Committee chairman Mr PV Jayakrishnan that "Iron ore has no substitute for the production of pig iron and our stock level will last for a very short period. The abrupt closure of mining in Bellary will result in complete stoppage of production at the plant.”
According to the Federation of Indian Mineral Industries, iron ore shipments from India, the world's third largest exporter of the mineral, will fall to 64 million tones in the current fiscal year. Karnataka has 9 billion tonnes of reserves accounting for nearly 38% of India's deposits. The crackdown on illegal mining has come at a time when Karnataka has emerged as a much sought-after location for major global steel sector companies planning to make inroads into India.
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