India exports iron ore at $100 a tonne, depending on grades while steel is imported at $600 to $700 per tonne. Any further delay in increasing iron ore production is dangerous to domestic steel industry and the mining industry will also suffer, creating increased unemployment in the country
According to the Chief Minister, Siddaramaiah, iron ore mining in Karnataka has resumed in 25 leased areas, based on the directives issued by the Supreme Court, subject to certain conditions. It may be recalled that there were originally 116 mining leases in Karnataka and the Central Empowered Committee had categorised these into three (A, B, C) sets of miners, depending upon the quantum of violations done by them. All those in category "C" were banned from mining activities. Mining had stopped for three years and was partially resumed in 2013 on the above basis.
It may be recalled that Lokayukta had detected illegal mining activities and in the final report had put the losses due to illegal mining and exports at Rs12,228.14 crore during 2006-10. Due to negligence of officials, the state lost Rs722.22 crore. Action was taken against six IAS/IPS officials with respect to losses suffered by Mysore Minerals Ltd.
The Supreme Court had permitted a cap of 30 million tonnes (mt) for mining. However based on the need, the industry has sought an increase it to 40 mt. Even here, it is likely that the mines will be able to produce about 20 mt. By the end of this year, it may be increased by another 4 to 5 mt. Delay in implementation of Rehabilitation and Resettlement has been cited as the major reason for slow progress in opening the mines in Karnataka after the clearance by Supreme Court.
In case of Goa, according to Sesa Sterlite officials, iron ore mining would resume in September-October, at the end of monsoon. The officials feel that (a) low grade ore price which is now hovering around $60 per tonne, (b) expected increase in royalties from 10% to 15% and (c) the 30% export duty would make mining unworkable. This is reported to be the feeling of AN Joshi, vice president, corporate affairs of Sesa Goa, who handles the company's iron ore business. Auctioning of ore in Goa is giving a boost to the commercial vehicle and yellow goods industry, such as cranes, conveyors and forklifts.
Meantime, according to Sridhar, executive director of Goa Mineral Ore Exporters Association, so far, 28 miners have paid stamp duty and are ready to start operations once the state government's mineral policy is announced. In any case, they expect the work to commence only after the monsoon rains stop.
The Shah Commission, on illegal mining, has recommended the iron ore and manganese miners in Jharkhand must shell out Rs14,500 crore for environmental violations, with manganese miners being charged a negligible Rs138 crore out of the above. The miners have been charged for carrying on mining operations without getting fresh green approvals. Leading corporations like Tata Steel, Steel Authority of India, Usha Martin and others like Rungta Mines, Rameshwar Jute Mills, Singhbhum Minerals etc have been mentioned.
Shah Commission has also charged that Indian Bureau of Mines (IBM) had approved schemes to increase production irrationally in certain mining clusters. They had submitted their first report on illegal mining in Jharkhand on 26 November 2013 to the UPA government, which, in turn, had asked the state governments concerned to send in their comments by 26th December. It appears that the Centre took its own sweet time to study the findings and took a stand that they need to bring the issue to Parliament, after the Cabinet had the opportunity to discuss the matter. Ministry of Mines is supposedly ready with an Action Taken Report on the Commission's earlier reports, including illegal mining in Odisha. There is a chance that this may be tabled in the current session of the Parliament.
Earlier in May, the Supreme Court had ordered temporary closure of 26 mines in Odisha as these were operating on the basis of irregular lease renewal. The closed mines accounted for 35 mt of iron ore out of 70 mt produced. Later on both Tata Steel and SAIL were given permission to start. In the meantime, 20 mines are still awaiting clearance.
JSW Steel, which has to obtain the iron ore from all the mines concerned, is worried about being able to maintain the production capacity of 10 mt due the uncertainties mentioned above. Steel demand in the country has increased, while the iron ore shortage continues with no clear end in sight. As a result, it would be planning to import half a million tonnes per month and will also try to secure some 10/12 mt in auction from Goa, since it has a beneficiation plant in Vijayanagar unit, where it could use the low grade ore.
Seshagiri Rao, joint MD of JSW Steel feels it is rather unfortunate that India exports iron ore at $100 a tonne (depends on grades) while importing steel at $600/700 per tonne. It is therefore, imperative that steps need to be taken to ensure that domestic production or ore increases so as to feed the steel industry and meet the demand.
While presenting his maiden budget, Finance Minister Arun Jaitley mentioned that he was hopeful that impasse in the coal and mining industry will be resolved by facilitating changes in the MMDR Act.
Seshagiri Rao echoed this sentiment by saying that "the government can bring in the new Mining and Minerals Development Regulation (MMDR) Bill, which should allocate mining concessions to companies which 'focus' on value addition." He felt that a transparent process in auction and allocation of mines needs to be chalked out with least discretion to the bureaucracy under the Act.
The questions that arise, after an initial study of the Shah Commission report would be to seriously act on the recommendations made, within a time frame, instead of passing these back and forth to various committees. The government should also think seriously as to whether mining concessions should be on a first-come-first basis. Or should it take the auction route or linkage to actual steel producers?
Any further delay in this matter is dangerous to the development of the steel industry and the mining industry will also suffer, creating increased unemployment in the country. We cannot afford both.
has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)