Supply shortage continues in Karnataka

Monday, 19 Mar 2012

Business Standard reported that the postponement of the Supreme Court verdict on illegal mining in Karnataka has put steel producers in a quandary as most of them have already cut production because only low grade iron ore is available from the E auctions of the Metal Scrap Trading Company.

The Supreme Court said that the three judges hearing the case will not be available for hearing on March 16. Last month, the apex court had adjourned the hearing on the case by two weeks to enable the Central Empowered Committee to hear the responses of the affected companies and the State Government.

Mr Seshagiri Rao joint MD of JSW Steel said the company has to cut down its capacity utilization to 70 per cent in February against 90% in January due to poor quality of iron ore being supplied by Metal Scrap.

He added that “We have about three to four million tonnes of iron ore stockpile left with us. The question now is whether we should be using it. Use of low grade iron ore is taking a heavy toll on our furnace.”

He added that “Unlike coal, iron ore cannot be imported as it will be unaffordable. The costs will increase substantially even if we have to source it from other states. Even if the Court allows opening up new mines in the state, it will take at least two to three months to start mining.”

Karnataka produces 16 million tonnes annually of iron and steel, constituting about 24% of the country's production of 66 million tonnes annually. Karnataka also supplies iron ore to companies located outside the State.

Source - Business Standard