The environment ministry is expected to submit an interim report to the Supreme Court on Friday on the extent of the iron ore requirement for the domestic steel industry. All steel plants would be hoping that the ministry?s report may tempt the apex court to either lift the ban or make it applicable to only the errant firms. Last Friday, the Supreme Court had imposed a blanket ban on iron ore mining in Bellary, after the Lokayukta report exposed rampant illegal mining in the district.
The government is expected to table a fact sheet before the court on Friday, trying to argue that a blanket ban on iron ore mining would severely impact the functioning of several steel plants in the region. Karnataka has 16 steel firms of varying sizes, and smaller players are already struggling on account of the ban. One would have thought that a steel company the size of JSW may not get impacted, but on Wednesday the company decided to close down two blast furnaces of 2.3 million tonne capacity at its Vijayanagar plant in Bellary. The company, which has an iron ore requirement of about 60,000 tonnes a day, procures half of its stock from Bellary.
If that is the case of a big player like JSW Steel, one can imagine what could happen to smaller players like Kalyani Steel and others. It is expected that if the ban continues for more than a fortnight, then many of the several sponge and pig iron mills in Bellary, Koppal, Chitradurga and Tumkur districts may down their shutters. Major steel producers like Tata Steel, Essar and SAIL are not expected to get affected, as they source their iron ore from elsewhere.
On Tuesday, Tata Metaliks, a subsidiary of Tata Steel, said it may close down its 2 lakh tonne per annum pig iron plant in Goa within a week, due to the paucity of iron ore. The plant is completely dependent on iron ore supplies from the Bellary-Hospet belt. Anticipating a crisis, the Karnataka Iron and Steel Manufacturers? Association has given a representation to steel minister Beni Prasad Verma in this connection.
Steel secretary PK Misra has gone on record stating that the Supreme Court is aware of the problems faced by the smaller steel manufacturers. The report prepared by the environment ministry is put together in consultation with other relevant ministries like mines, steel and commerce, he said.
The Supreme Court had earlier restrained 19 leaseholders in Bellary from mining, by way of orders passed in April and May. Already, ore mining in the state had come down drastically even before the SC ban, due to the national attention. Kirloskar Ferrous in Koppal, for instance, is operating a single furnace and KMMI Steel is running only 40% of its total capacity. About 50 sponge iron plants and another five pig iron plants in the state are on the verge of closure. The only other option under consideration is sourcing iron ore from Orissa, where it is much costlier.
According to the Bangalore Chamber of Industry and Commerce (BCIC), a permanent ban of iron ore mining in Bellary will result in a 0.5% impact on GDP. Karnataka produces around 16 million tonnes of iron and steel a year, constituting about 24% of the country?s total iron and steel production at 66 million tonnes per annum, according to statistics available with the chamber. The state supplies iron ore to large and medium scale steel plants located in Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu and these too would get impacted.
The BCIC, while fully supporting the steps initiated by the Supreme Court for curbing illegal mining, has stated that suspension of mining and transportation in Karnataka would result in grave implications for the steel industry. It would lead to considerable manpower layoffs, idling of huge investments, as also socio-economic unrest in the region, the industrial body said in a statement. It is also feared that an iron and steel shortage can also have a ripple effect on auto, consumer durables, construction and infrastructure industries.
India, which is already a net importer of steel, imported almost 7 million tonnes of steel last year. Imports will increase by an additional 16 million tonnes due to the suspension of mining, BCIC officials have said.
Steel producers are hopeful that the Supreme Court will consider these aspects and offer them some relief. The environment ministry report to be tabled on Friday is expected to advise the court on these lines.
dj.hector@expressindia.com