Lack of state approvals offsets SCís mining ban relief, output crawls

Nov 21 2013, 00:41 IST
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SummaryDonít blame just the industry for the countryís mineral production falling 2.5%

Donít blame just the industry for the countryís mineral production falling 2.5% in April-September, dragging down the overall industrial output and GDP. Seven months after the Supreme Court lifted the ban on iron ore mining for the majority of lease areas in Karnataka that accounted for 70% of the stateís ore output before the crackdown, production from these mines continues to crawl. The reason: The state governmentís failure to give the necessary clearances.

Out of 115 mines (categories A and B) that are eligible to start operations after the Supreme Courtís April verdict, only 15 have commenced operations so far and, according to mines ministry data, their production up to the end of October has been around 6 million tonnes (mt). Annual production from these 115 mines stood at 35 mt in 2009-10, the year before the illegal-mining scam erupted, leading to imposition of the ban by the apex court in July 2011.

Karnataka and its mineral-rich Bellary district had produced a little over 50 mt of iron ore in 2009-10 from 166 mines, including 51 category C mines, the permits for which now stand cancelled. That was 23% of Indiaís total output then.

ďThere is no proof that approvals being granted by the government to the mining companies have helped them begin operations; the process is very slow. It is getting worse,Ē Mineral Enterprises MD Basant Poddar said. Global majors like Posco and ArcelorMittal, it may be recalled, had scrapped proposed steel projects in the state due to delays in land acquisition.

Thankfully, state-run NMDC, whose mining activities in the state havenít been affected by the ban, has increased its output to 9 mt (April-October) from an annual 2 mt four years ago.

ďBy the end of this financial year, iron ore production from the state is likely to touch 20-22 mt, including that of NMDC,Ē RK Bansal, additional secretary general of Federation of Indian Mineral Industries, said. NMDC, now the largest iron ore producer in the state, operates two mines ó Kumaraswamy and Donimalai.

Around 73 mines under the A and B categories have received approvals for rehabilitation and reclamation plans as prescribed by the central empowered committee (CEC) and are awaiting further necessary approvals.

According to industry experts, at the current estimated annual production level of 140 mt and taking an average ore price of $100 per tonne, the size of the Indian iron ore industry is likely to

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