SC lifts annual iron ore mining ceiling in Karnataka to 35 million tonnes

The SC also ordered the monitoring committee to act immediately in regard to the enhancement proposal filed by 13 mining leases
In some good news for Karnataka’s iron ore mining industry, the Supreme Court (SC) has lifted the ceiling from 30 million to 35 million tonnes for the A and B categories that it had placed on the total production in the state. 

The major beneficiary would be JSW Steel, which has been spending heavily to bring ore from the eastern states.

In Thursday’s judgement, the Supreme Court also ordered the monitoring committee to act immediately in regard to the enhancement proposal filed by 13 mining leases.

Basant Poddar, former chairman and member of the Federation of Indian Mineral Industries, South, said, “We welcome the SC judgement, as it clearly said the 13 pending cases recommended by the Karnataka government to the CEC to be decided soon. The judgment is extremely well balanced and has factored all arguments and positions.”

Industry sources said after the ban was lifted in April 2013, the enhancement in production capacity would boost industries in the region. It will also ensure smooth supply of raw material to the steel industry which otherwise buys from outside the state or even sometimes imports at a cost three times higher.

Thirteen mining leases in Karnataka had filed a petition before the SC in May 2016, urging for an enhancement of the permissible annual production limit in respect of Category A and B mines. Based on the Central Empowered Committee's (a body set up by the court) instruction, the state government in August 2017 asked its department of mines and geology to technically evaluate the proposals. The process of reaching a consensus there is yet to conclude.

According to industry sources, the total potential for iron ore mining is 50-60 mt a year, of which A & B categories are 40-50 mt. With the SC's cap, only 30 mt could be mined in a year, now enhanced to 35 mt.

JSW, the major beneficiary, has a 12 mt a year capacity plant in Karnataka. This needs 24-25 mt of iron ore. JSW has been importing around 30 per cent of the requirement from elsewhere, mainly Odisha, Jharkhand and Chhattisgarh. It company will now be able to save Rs 1,000-1,200 a tonne in only logistics. 

Beside, government-owned NMDC has been the monopoly supplier; industry sources say JSW has been paying Rs 700-800 a tonne premium to NMDC. Recently, the JSW management met NMDC officials to discuss pricing. 

Also, two months earlier, JSW had won five iron ore mines in Karnataka from the auction two quarters earlier; they said they couldn't start these because of the output cap. Thisis another plus for the company from the SC order.

The industry says the prevailing CEC cap on individual mines also needs to be relaxed to reap the benefit of Thursday's judgement. 

With an additionally proposed 4.04 MT for 13 mines in Chitradurga and Ballari, the state would have got a lot more revenue and jobs.

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