New ore auction rules perilous to sponge iron industry, say manufacturers

 Manufacturers of sponge iron are looking down the barrel due to the government’s decision to lease out ‘C’ category mining areas through e-auction. Eleven mining areas under the category in Ballari and Chitradurga districts are to be auctioned. 

As many as 67 sponge iron units in the districts of Ballari, Koppal, Raichur and in neighbouring Andhra Pradesh are already reeling under a shortage of ore, their principal raw material.

Owners of these units fear that the e-auction process may further create a crunch, pushing them to the brink.

Of the 67 units, only 22 are functioning.
As per the new auction rules, the company which has won the contract has to use all the ore produced.

Also, the companies have to take part in the e-auction process as single entities.
Rates of mining areas available for auction have also gone up, making it difficult for owners of sponge iron units to take part in the auction process.

The new rules favour owners of big industries, says the Karnataka Sponge Ore Manufacturers Association.

T Srinivasa Rao, president of the Association, said that the sponge iron units require just between 50,000 tonnes and 80,000 tonnes.

The sponge iron producers can neither purchase ore in the range of millions of tonnes available through e-auction nor utilise the quantity purchased.

They cannot even sell the ore purchased through e-auction.  
Rao told Deccan Herald that 30,000 tipper lorries were rusting without work in Ballari and Hosapete. This has pushed 20,000 workers and two lakh dependents to the streets.

He cited the report by former Lokayukta Justice Santosh Hegde, in which he has sought rules for providing ore to local industries.

He said that the fee to purchase applications for the tender process was Rs five lakh and that it was too high for small industrialists.