The Karnataka High Court will hear Vedanta Ltd’s writ petition Tuesday on the issue of allowing iron ore exports from the state’s mines.
The Karnataka High Court will hear Vedanta Ltd’s writ petition Tuesday on the issue of allowing iron ore exports from the state’s mines. In its petition, Vedanta (formerly Sesa Goa) has sought quashing of Supreme Court appointed Monitoring Committee’s April 5 communication that rejected the company’s request to allow it to export the iron ore unsold at the E-Auction.
The Monitoring Committee, appointed by the apex court to end indiscriminate mining along with fair and transparent pricing, conducts the e-auction. The state’s Director of Mines & Geology is the other respondent in the case.
In its petition, Vedanta has claimed that the Monitoring Committee’s decision is “totally contrary” to the final judgment of Supreme Court in April 2013, where the court had specifically accepted the recommendations of the Central Empowered Committee.
According to these recommendations, export of iron ore should be permissible only when steel plants are not willing to purchase the mineral on or above the average price realized by the Monitoring Committee during the sale of corresponding grades of 25 million tonne existing stock of fines/lumps.
According to Vedanta, it sought the Monitoring Committee’s approval for exports because in the past few months, the iron ore (lumps and fines of different grades) put up for sale through e-auction was not being purchased by steel companies.
This happened even though the base sale price fixed by the company was in line with the average price realized by the Monitoring Committee for the corresponding grades during the sale of 25 million tonne of existing stock of iron ore.
“Since the steel manufacturers were not willing to purchase at that price, it resulted in piling up of iron ore stocks within the mining lease area, which impacted our mining operations as well as earnings. We were also constrained to put up the same stock of iron ore repeatedly for sale through the process of e-auction by reducing the base sale price and it further hurt our revenues,” said a senior company official.
“Under such circumstances, we requested the Monitoring Committee to grant us permission to export such quantity of iron ore that remains unsold in the e-auction,” the official added.
According to Karnataka mining industry, with 30 million tonne of production capacity and excess additional supply of around six million tonne from stocks, old confiscated ore and mines with extended lease period, the state is currently facing a surplus supply situation. The problem has been compounded because exports are ruled out at current juncture.
“For the first quarter of 2016-17, more than 34% of the iron ore or 3.42 million tonne put up for auction has remained unsold,” said an industry official. “Further, due to grade/specification mismatch it is difficult to sell all the iron produced in Karnataka to the end-users in Karnataka.”
TThe industry official said that the situation is likely to worsen in the coming months as the Monitoring committee will put up more old confiscated ore for auction.