Iron ore exports from Karnataka set to resume

Iron ore miners in Karnataka are gearing up to resume exports of the key steel-making raw material, nine years after the imposition of a complete ban on exports from the state.

Recently, the Supreme Court-appointed Monitoring Committee recommended to the apex court for limited withdrawal of export ban subject to fulfilment of certain conditions. The court is likely to hear the matter next month.

The Karnataka government, in July 2010, had imposed a blanket ban on exports, which was subsequently upheld by the Supreme Court in 2011.

If all goes well, the miners hope to resume exports during the second half of the current financial year. The Monitoring Committee is of the opinion that only low-grade iron ore fines (54-58% Fe) can be allowed to be exported. However, it said the lumps (high-grade) should not be touched. It is estimated that around 6 million metric tons of iron ore fines can be exported, half of which contain less than 57% Fe iron content.

It is expected that an estimated revenue of Rs 180 crore could be earned by the state government in the form of royalty, taxes and SPV contribution. The railways can add another Rs 300 crore to their topline if they carry iron ore for exports to the port.

Basant Poddar, former chairman of the southern chapter of Federation of Indian Mineral Industries said, “The withdrawal of export ban will lead to a level playing field in the industry. As there is no demand for the low-grade iron ore from the steel industry in the state, it would help the miners to get market for their produce. Also, it will help in earning valuable foreign exchange for the country, besides the idle railway rakes could be put to some use.”

However, acceptance of the Monitoring Committee recommendations is subject to no objection from the Karnataka government. The state government is yet to submit its views to the apex court.

The Committee said that export of an equal amount of iron ore fines that were imported into the state in 2018-19 can be permitted. In a report submitted to the apex court on May 3, 2019, the Monitoring Committee headed by Chairman Dipak Sarmah has stated that certain quantity of iron ore fines of all grades equivalent to the quantity imported during that year as well as equivalent to the quantity produced from C-category mines during the year may be allowed to be exported through e-auction.

The last instance of iron ore exports from Karnataka was in 2009-10 when the state exported 30 million tonnes.

Among the conditions suggested by the Committee are: the existing ratio of lumps and fines must be maintained by the respective lessees, and any change in the ratio compared to the ratio of past four years will be considered as a violation, attracting penal actions as deemed fit. This condition has been suggested to ensure that the mining lease holders do not resort to crushing of lumps into fines for the purpose of export. The quantity to be exported should be through e-auction only.

The lease-wise entitled quantity for export should be through e-auction by the Monitoring Committee with approved modalities. The modalities in this regard will be finalised and placed before the apex court for approval if it is agreed in principle for export of the quantity as suggested.