The Supreme Court ruling on the opening of iron ore mines in Karnataka has brought some temporary relief for the troubled steel industry. Around 81 mines under categories A and B, with minor violations of environment and forest regulations, have been permitted to commence operations in Karnataka while all mines under category C, with violations exceeding 10%, have been instructed to close operations and will be put up for auction to the highest bidder. It is also desired that the output from these mines be utilised for captive use and not for exports.
Following the court ruling, the steel units dependent on iron ore supply from Karnataka are talking about annual availability of at least 24 million tonne. But the association representing the miners envisages that not more than 10 million tonne would be available. Thus, there is a big gap in assessment. Clearly, the association, which has been clamouring for greater exports and has already bemoaned in the foreign media its concerns regarding lost exports of ore from India to China, would say the decision wil have little impact on availability. Hopefully, sponge iron units will also benefit from higher supply of raw materials. The allotment of new mines to RINL by the Andhra Pradesh government, and SAIL?s decision to engage a Mines Development Officer to enhance output and productivity of the existing mines, indicate public sector steel plants? strong resolve to augment raw material supply to meet the requirements for fresh steel capacity.
The latest data on steel imports by Joint Plant Committee (JPC) indicate that China has a 12% share in total non-alloy steel imports to India in 2012-13. This is against Japan and South Korea?s shares of 21% and 22.5%, respectively. It may imply that China?s predominance in the Indian steel market has indeed waned with a corresponding rise in shares by other two Asian countries. But if one takes a holistic view, the indirect trade report of WSA shows that in 2011 India?s total imports of metal products, mechanical machinery, electrical equipment, domestic appliances, automotive and other transport equipment, and other items that primarily contain steel as the major input, reached around 4.2 million tonne, which, when converted into steel as per the average conversion factor, would translate into 3.2 million tonne of indirect imports of steel by India. Of this, the maximum share has been taken by China. Thus, while in direct steel imports by India, China stands at the third position, in both direct and indirect imports of steel, taken together, it gets the first rank.
The capital goods industry in 2011-12 had observed a growth rate of -4% over the previous year. As most of the above segments belong to capital goods, the heavy imports have only led to loss of market share, low production, poor capacity utilisation, and, ultimately lowered the intake of steel from indigenous sources.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal