Iron ore imports to Karnataka from other states have gone up 68 per cent in July to 1.55 million tonne (mt) from 0.92 mt in June. This is mainly owing to steel companies, including JSW Steel, relying more on imports for their mills in Karnataka.
Higher import had led to losses for mines, production piling up and now a threat of job cuts is looming. This has also brought down the price by 10-15 per cent in the state, say local miners who called for restriction of imports.
The controversy started in April when mills reduced their purchases from the auction which is the only route for state mines to sell iron ore. As a result, many mines, including NMDC and other private sector companies, have seen iron ore lying at mine heads unsold forcing some of them to reduce mining operations.
Also, iron ore imports touched 1.55 mt in July 2018, a rise of 33 per cent over July 2017, when the figure was 1.16 mt.
A leading private sector iron miner said, “The reason for the Supreme Court not permitting export of ore from Karnataka was to ensure that iron ore supply to domestic steel manufacturers rises. Steel companies’ continuous imports at a time when enough material is available domestically is resulting in inventory getting piled up with mines, hitting the state exchequer and jobs. The mining industry will be forced to reduce jobs or contracts for operation and transportation of materials in the region. It’s high time that decision makers in the judiciary and bureaucracy devise a policy for a level-playing platform for Karnataka miners and work towards removing the trade barriers which is adversely affecting the sector at large.”
Majority of the iron ore imports – around 1.27 mt or 82 per cent – has been undertaken by a Karnataka-based large steel company, which local miners says is JSW Steel.
While JSW officials were not available for comment, the company's management, in a recent investor call, said, “We were trying to look at higher FE (grade) content in ore, lower alumina where in the mix will be getting better value in use.”
“First, whatever is available in Karnataka we will take that first. Whatever balance requirement is there, we will have to source from out of the country as well as from Odisha,” said an official of the JSW Steel management.
However, Basant Poddar, former chairman and member of Federation of Indian Mineral Industries (FIMI), South, and one of the largest miners, alleged that steel companies are not taking iron ore from the domestic market and are asking for a 66 per cent price reduction.
He noted that prices of iron ore in Karnataka dropped by 10-15 per cent, while in Odisha it increased 10-15 per cent.
For instance, 62-grade fines prices was Rs 2,942 a tonne in May, dropped to 2713 in June and Rs 2,439 in July. Poddar also said that imports to Karnataka is coming at a time when inventory levels are increasing within the state.