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Karnataka steelmakers seek govt intervention on iron ore crisis

New Delhi, Nov 23, 2012 (PTI)

Seeking immediate intervention of Steel Ministry, steel producers from Karnataka today said they may have to shut their shops due to shortage of iron ore and its higher prices. "There are 37 units which are closed. There are sponge iron units, pig iron units which are operating at less than 25 per cent capacity.

 Even the integrated plants are operating at 68 per cent as there is a severe shortage of iron ore," JSW Steel's Joint Managing Director Seshagiri Rao told reporters here.

Iron ore shortage seems to be increasing in the coming days due to host of issues and steel companies, at best, can continue to run their plants for two months in the current situation, he added.


The issues include inventories getting exhausted, state-owned producer NMDC is not producing at its permitted levels of 1 million tonnes and charging premium prices for the auctioned ore, said Rao, who was speaking on behalf of Karnataka Iron and Steel Manufacturers Association (KISMA). Besides, slow pace of approvals for Category-A mines in the state, which have been permitted by the Supreme Court to resume mining, is also hurting the industry, he said, adding that KISMA today made a representation to the Steel Ministry seeking their immediate intervention.

"Stock pile has got exhausted, NMDC is not producing at its permitted capacity. We are seeing that this shortage is going to increase further.

"If approvals for Category-A mines are not forthcoming to resume operations, then there will be a huge problem... Taking this together, at best for 1.5 months to 2 months we will be able to continue," he said.

Commenting on the situation, Suketu Shah, Joint Managing Director of Mukand Steel, said that NMDC -- the sole miner operating in Karnataka-- has ignored international market rates and charging higher prices, making things difficult for the steel makers in the state.

"In last 2 auctions, I think they (NMDC) have been able to sell only 5 or 6 per cent, definitely less than 7 per cent.

 So even if they have brought down the price, still 93 per cent remains unsold. What does it tell you. The prices are simply not affordable," he said.

Steel industry in Karnataka has been facing iron ore shortage for over a year now due to a Supreme Court imposed mining ban in the state.

The companies were provided some relief later, when the apex court allowed auction of 25 million tonnes (MT) of ore lying at the mines and later permitting NMDC to produce 12 MT per year.

In April, the apex court also allowed resumption of mining in 20 mines, which have been categorised as Category-A mines by a court-appointed Central Empowered Committee.

 However, till date only 3 mines have resumed operations with an annual production capacity of 1.40 MT. 

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