Wednesday, 10 Aug 2011
It is reported that dirty politicking in Karnataka has exposed the underbelly of the mining industry and also brought the iron ore industry to a standstill. The snowballing crisis could dampen Karnataka's investor friendly image and particularly affect investments in steel.
Steel companies had accounted for the major chunk of the INR 50,000 crore investments attracted by the state during the Global Investors' Meet in 2010.
Mr Basant Poddar VP of Federation of Indian Minerals Industries said that "Many companies are already rethinking on their decision to invest in Karnataka. Land acquisition and power are also posing big challenges."
Mr GVSB Reddy COO at mining consultancy Vajra Natural Resources said that even if the projects are not withdrawn, they are likely to be put on hold. With the ban on mining, they have good reason to seek extension for their projects.
India produces 65 million tonnes of crude steel, of which Karnataka accounts for 16 million tonnes.
The Bangalore Chamber of Industry and Commerce estimates that the suspension on iron ore mining in Karnataka would impact the national GDP as the sector has a 6.2% weightage in the Index of Industrial Production. With steel production down by 25% in Karnataka on account of the mining ban, BCIC says the GDP would be negatively impacted by 0.5% or USD 8.5 billion.
Iron and steel shortage would lead to a cascading effect on the price of automobiles, consumer durables, construction and infrastructure. India imported 7 million tonnes of steel in 2010 and in the current scenario; it could lead to an additional import of 16 million tonnes.
A BCIC official said that "This will cause additional foreign exchange drain of USD 12 billion per year which is 3.9% of the country's current forex reserve. There will also be a loss of INR 10,000 crore annually to the state exchequer."
The ban on mining and exports has caused uncertainty for the around 100,000 directly employed people in these businesses.
(sourced TOI)
It is reported that dirty politicking in Karnataka has exposed the underbelly of the mining industry and also brought the iron ore industry to a standstill. The snowballing crisis could dampen Karnataka's investor friendly image and particularly affect investments in steel.
Steel companies had accounted for the major chunk of the INR 50,000 crore investments attracted by the state during the Global Investors' Meet in 2010.
Mr Basant Poddar VP of Federation of Indian Minerals Industries said that "Many companies are already rethinking on their decision to invest in Karnataka. Land acquisition and power are also posing big challenges."
Mr GVSB Reddy COO at mining consultancy Vajra Natural Resources said that even if the projects are not withdrawn, they are likely to be put on hold. With the ban on mining, they have good reason to seek extension for their projects.
India produces 65 million tonnes of crude steel, of which Karnataka accounts for 16 million tonnes.
The Bangalore Chamber of Industry and Commerce estimates that the suspension on iron ore mining in Karnataka would impact the national GDP as the sector has a 6.2% weightage in the Index of Industrial Production. With steel production down by 25% in Karnataka on account of the mining ban, BCIC says the GDP would be negatively impacted by 0.5% or USD 8.5 billion.
Iron and steel shortage would lead to a cascading effect on the price of automobiles, consumer durables, construction and infrastructure. India imported 7 million tonnes of steel in 2010 and in the current scenario; it could lead to an additional import of 16 million tonnes.
A BCIC official said that "This will cause additional foreign exchange drain of USD 12 billion per year which is 3.9% of the country's current forex reserve. There will also be a loss of INR 10,000 crore annually to the state exchequer."
The ban on mining and exports has caused uncertainty for the around 100,000 directly employed people in these businesses.
(sourced TOI)
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