SC mining stance to stunt State steel sector

Following the directive, Vedanta Group firm Sesa Goa, on Friday, said it will stop mining in Chitradurga with immediate effect. Sesa Goa, which has produced 18.8 million tonnes of iron ore in the last fiscal, had said earlier that ban on mining in Chitradurga will affect its gross revenues by up to 15 per cent.

The two districts, which are situated in the South-Eastern part of Karnataka, account for around 20 per cent of the tate’s annual iron ore production of about 45 million tonne.

Though the ore produced in the two districts is of a lower grade, and is mainly exported to China, ceasing mining operations would still mean a death blow to the State’s steel industry.

Earlier, the State’s steel output was hit when the apex court banned mining in Bellary (which accounts for around 80 per cent of State’s  iron ore production) on July 29, this year, owing to alleged illegal mining taking place there. Steel companies reduced their production significantly, and now, with the suspension on mining in Chitradurga and Tumkur, the industry will be forced to shut shop due to non-availability of iron ore.

Mentioning that the State’s steel industry is in closure mode, Bangalore Chamber of Industry and Commerce (BCIC), in a statement, said, “all steel companies are heavily dependent on Bellary, Chitradurga and Tumkur districts for iron ore. The industry has already cut production due to shortage of iron ore, after the Supreme Court allowed only NMDC to mine one million tonne of iron ore per month in Bellary district.”

According to BCIC, iron ore demand of steel and allied industry in Karnataka alone is 2.9 million tonnes per month, while NMDC has been allowed to mine only 1 million tonne per month.

The biggest threat to the steel manufacturers is the shutting down of blast furnaces within weeks, due to ore shortage. Many steel majors have begun running at lower capacities.

Earlier this month, State’s largest steel producer JSW Steel (annual capacity 10 million tonnes) had said it was operating its steel units in Karnataka’s Vijayanagar district and Tamil Nadu’s Salem at around 80 per cent of its design capacity due to a shortage of iron ore.

Subsequently, as a direct fall-out of mining scam, the company also announced that it had closed down two blast furnaces of about 2.3 million tonnes steel production capacity at its Vijayanagar plant in Bellary district, due to the unavailability of iron ore.

In such circumstances, the suspension on mining in Chitradurga and Tumkur will only jeopardise the industry further. “There will be a loss in revenue to the exchequer and the overall economic development will be severely affected, with more than 80,000 people working in the industry being rendered jobless,” BCIC stated, adding the livelihood of over one lakh people, associated directly or indirectly, will be threatened. In a bid to protect the industry and livelihood of people, it suggested allowing supply of ore from the stock of 25.88 million tonne lying in the mines and stockyards.