There is the fear that a total ban on mining of iron ore in Odisha would practically cripple the iron and steel industry in the country

Odisha is India's largest iron ore producer, accounting for nearly 45% of production of 145 million tonnes. Besides iron ore, it is also the large producer of chrome and bauxite. There is the fear that a total ban on mining of iron ore in Odisha would practically cripple the iron and steel industry in the country.

It is generally believed that more than 100 illegal mining operations are being carried out in Odisha leading to environmental degradation. It may be recalled that the Supreme Court lifted the ban on iron ore mining in Karnataka a few months ago, and the industry is limping back, though normalcy will take a few months more to achieve. In the meantime, only a few weeks ago, iron ore mining operations in Goa was lifted, though with conditions, where the industry feels that it would be a good six months or so before some semblance of normalcy can be expected there. As reported in Moneylife earlier, there are chances that the cap of 20 million tonnes may be increased taking into consideration the overall impact in the country.

Today, Lawyer Prashant Bhushan, on behalf of NGO Common Cause will seek a temporary ban on Odisha mines that do not have clearances. It may be borne in mind that a total ban would hurt the domestic industry and lead to needless imports; and even if this should occur, it would be atleast 60/90 days before imported ore can reach India, during which time, the steel industry would suffer, and thousands would be unemployed, for no fault of theirs!

The state government is expected to meet the Central Empowered Committee that has been appointed by the Supreme Court to decide what interim orders could be issued.

MB Shah Commission recommendations, it may be recalled, seeks a closure of all illegal mining operations. Penalties imposed on defaulters be directed towards welfare of tribals and villagers. Petition also seeks for a CBI probe into mining and for restoration of revegetation and natural surroundings. Besides, it seeks all mined ores to be traced electronically and sold through e-auctions!

Based on the petition submitted by Prashant Bhushan, NGO Common Cause, the Supreme Court has given four weeks to both central and state governments to file their replies. It has also directed the Court appointed Central Empowered Committee to prepare and submit an interim report on mining in Odisha and also submit a list of miners who have been operating in the State without proper environmental and forest clearances. On all these matters, the Court will be hearing the case today for the interim order.

India's largest FDI of Rs52,000 crore covering the POSCO Steel plant, to be set up to produce 12 million tonnes of steel at Jagatsinghpur is stuck for the last eight years due to regulatory hurdles and delays in land acquisition. The Centre has asked the state government to resolve these issues without delay!

In the case of Jindal Steel & Power Ltd, the Odisha Directorate of Mines has ordered the closure of Sarda Mines Private Ltd's Thakurani mines, owing to expiration of environmental clearance, as on 1st April 2014, effectively cutting off supplies to JSPL, which sources all the iron ore produced in these mines!

It may be noted that JSPL was sourcing these iron ore fines for its 5 million tonnes pellet plant at Barbil in Odisha and lumpy ore for its 3 mt steel plant at Raigad in Chhatisgarh. Luckily for JSPL, it has adequate stocks on hand and the inventory is estimated at 15 million tonnes, which will be presumably transported to the pellet plant, until the formalities are completed.

One other issue that would also need government assistance is the clearance for companies working on "deemed leases". If the state government gives preference to original lease holders, the industry may be relieved but if new bidding process is to be held, this would be time consuming and may delay the starting of the mining operations, once they come to a stop.

India's export of iron ore fines has gone down to 16 million tonnes in 2013 against 108 mt in 2010. Compare to this poor performance, Australia exports 600 million tonnes, while Brazil runs second at 300 million tonnes.

Now the issue at stake is not how much India can export. What is of paramount importance is to keep the Indian steel industry going. We must remember that it took months when mining activity came to a stand still in both Karnataka and Goa. As we mentioned before, Karnataka has not yet realised its full potential, while Goa would take another six months or so before some activity can be seen, since a lot of formalities have to be completed for the existing mine owners, particularly those who have proper documentation and clearances. Of course, it is imperative that illegal mining activity must be stopped; but those with the least "lapses" in terms of compliance of formalities should be permitted to commence their operations.

A total ban would affect the industry and thousands employed, besides loss of revenue for the country.

(AK Ramdas 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.)