The ban on mining seems to have made Karnataka the dumping ground for poor quality iron ore. The mining firms that are allowed to sell certain quantity of iron ore in the state through e-auction, are mostly selling iron ore of below 50-55% iron content. This has dented their market as the steel units, despite the shortage of raw material, are not buying ore from them. Almost 70% of the commodity remains unsold.
?The quality of iron ore is so poor that its effecting the end product. Most of the material has been lying open around the mines for last one or even more years. But, we do not have any option. Transporting it from states like Orissa will hike the total cost of the steel,? Kirloskar Ferrous Industries, managing director (manufacturing units) R V Gumaste said.
The supply of iron ore has been a major trouble for the steelmakers in Karnataka after the Supreme Court?s ban on mining activities. The apex court after banning mining in the state had allowed the auction of 25 million tonne (mt) stockpile at various mines in the three districts of Bellary, Chitradurga and Tumkur. However, the miners have not been able to do so. The steel companies are not buying low grade iron ore.
Till December, only 11.4 mt iron ore was sold as against 16.8 mt that was offered in the bidding.
Similarly, in the latest auction in February, the miners could sell only 36.8% of the mineral that was put on sale. Of the 1,52,000 tonne of iron ore, 96,000 tonne was sold.
?Even the government-owned NMDC is selling iron ore below 55% iron content. The problem is worse for the smaller units. Even if we buy smaller quantity, the miners take a lot of time to deliver it,? Karnataka Sponge Iron Manufacturers Association (KSIMA) president T Srinivasa Rao said.
Supreme Court had appointed the Central Empowered Committee (CEC) to prepare a report on the alleged illegal mining in the state. The committee has submitted the final report.
It has suggested the cancellation of the licenses of 49 mining leases.
For another 72 leases, it has recommended that the miners should pay a penalty or ?exemplary? compensation, before they are allowed to start mining. The entire mining industry is now awaiting a decision by the Court.