Steelmakers brace themselves for Odisha mining ban

May 05 2014, 14:26 IST
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Last week the apex court had hinted at imposing a ban on mining in Odisha along the lines of the one in Goa while reserving its final order Last week the apex court had hinted at imposing a ban on mining in Odisha along the lines of the one in Goa while reserving its final order
SummaryState government would have to formulate a policy for granting fresh leases and only then can companies resume mining

Karnataka, Odisha is a prime suppliers of iron ore.

As it is, Karnataka, which produced around 43 mt in 2010-11 is able to produce only around 18 mt (half coming from state-owned NMDC) despite the SC lifting the ban a year ago while capping the annual output at 30 mt.

In this scenario, the plight of domestic steel makers can well be understood. The country produces around 80 mt of steel. Since 1.5 mt of iron ore is required to produce 1 mt of steel, domestic steel companies need around 120 mt of iron ore. Though during FY14 the total output of iron ore was 120 mt, around 15 mt was exported.

With a Goa-like ban on Odisha, output would decline further in the current fiscal even if there is some increase in production from Karnataka. The end-user industries of iron ore would be left with no choice but to look at imports once again. Due to the ban on mining, in FY14 for the first time a small consignment of 1.3 mt of iron had to be imported.

As it is, steel imports have been increasing. From a level of 5.8 mt in 2008-09, it climbed to 7.8 mt during 2012-13. The import of scrap, a substitute to iron ore for steel making also rose to a record high in FY13 at 7.9 mt.

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