Karnataka steel mills likely to face closure - ASSOCHAM

Friday, 20 May 2011

ASSOCHAM release said that major steel mills in Karnataka could soon be forced to close operations due to shortage of iron ore, threatening the livelihood of lakhs of families.

In a release, industry body the Associated Chambers of Commerce and Industry of India said that the impact of current crisis stemming from a blanket ban on iron ore mines in the Bellary Hospet region is likely to spread fast to smaller units and leave lakhs of workers jobless.

On May 6th 2011, the Supreme Court asked a team of officials to conduct a joint survey of mining lease areas mentioned in the Lokayukta report.

ASSOCHAM said that "If the joint team concludes that there has been illegal mining in encroached areas, then the lessee will immediately stop all mining operations in the entire demarcated area."

Mr DS Rawat secretary general of ASSOCHAM, in letters to Mr BS Yeddyurappa chief minister of Karnataka and Mr PV Jayakrishnan chairman of the Central Empowered Committee, said that "The Supreme Court has not given any direction to completely stop all mining activity in the district. In fact the apex court has asked to assess the encroachment in a scientific manner without effecting the current operations."

Mr Rawat said that but officials at the Department of Mining and Geology at Hospet have issued closure notices to all mines in the district, severely affecting the functioning of steel industry.

The mines in Karnataka supply iron ore to several large steel plants like JSW, Kirloskar Ferrous, Mukand and Kalyani Steels. The State also supplies raw material to dozens of small and medium sized sponge iron units located in Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu.

Steel, iron and other industries have invested close to about INR 70,000 crore in the landlocked Bellary Hospet region, which has abundant availability of iron ore.

Mr Rawat said that "The State finances will be adversely affected as these industries are paying to the tune of INR 8,000 crore a year in the form of excise duty, royalty and value added tax."

ASSOCHAM release said that mining should be moved from unorganized sector to the organized if it is to be done in a legal, scientific and environment friendly manner.

Karnataka accounts for 15 million tonnes of steel production representing 25% of the country's output. Keeping in view the huge investments, employment of lakhs of workers, social responsibilities and dependency of industries on iron ore, the chamber earnestly requested the CEC to ensure uninterrupted availability of iron ore lumps and fines to meet industrial requirement while complying with the Supreme Court order.