Karnataka steel mills may have to wait longer for smooth iron ore supply

Steel mills in Karnataka may have to wait longer to get a smooth supply of iron ore. The supply of the key steel-making raw material is unlikely to improve in the state this year (2015-16) as a large number of mining leases are still awaiting final approval from the state government. Over 30 mining companies whose leases expired are waiting for deemed renewal under the provisions of the Mines and Minerals (Development and Regulation) Act, 2015.

These mining leases can add another 4 million tonne (MT) of iron ore per annum to the state’s production.

Currently, the annual production is stagnated between 19 and 21 MT per annum. The steel industry in and around Karnataka requires an estimated 35 MT per annum.

“Around 35-40 mining companies shut their operations following the expiry of their leases. However, they qualify for deemed extension as per Section 8 (A) of MMDR Act, 2015 up to 2020. But the state department of mines and geology is not issuing the final approval without any valid reason,” Basant Poddar, senior vice-president, Federation of Indian Mineral Industries (FIMI), told FE.

The delay in issuing final approval under the provisions of the amended MMDR Act by the state government is causing hardship not only to miners, who have complied with all norms, but also the steel industry, which is forced to cut down their production capacities, said Poddar, who is also managing director of Mineral Enterprises (MEL), the second-largest private-sector miner in Karnataka.

MEL, which has an approved capacity of 1 million tonne (MT) per annum, is among those miners waiting for a final seal of approval from the Karnataka government. The company has implemented the Supreme Court’s directions for carrying out environment conservation plans and has secured all regulatory approvals. “The state government notified our lease for renewal. But we are still waiting for the director, mines and geology, to put his signature on the file,” Poddar said.

Currently, only 24 mining companies are operational in the state, including two state-owned miners — NMDC and Mysore Minerals. The combined production from all these miners is estimated at 21 MT in FY16. The steel industry, dependent on Karnataka’s ore, requires an estimated 35 MT per annum.