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Iron ore scarcity set to worsen in Karnataka

The scarcity of iron ore is set to worsen in Karnataka in the next one or two months, as the ore sold through electronic auctions (e-auctions) is depleting fast. Of the 25 million tonnes (mt) of stockpile earmarked for auctioning, the monitoring committee supervising the auctions has so far released only 15 mt.

Till now, 33 rounds of auctions have been conducted. In March, another two mt are going to be auctioned, sources in the state department of mines and geology said.

The steel industry is of the opinion that it might have to shut operations if the Supreme Court does not allow resumption of regular mining immediately. With a majority of the remaining 10 mt being low-grade (around 52-54 per cent Fe content), iron and steel manufacturers may find it difficult to continue production. Left with no option to maintain regular production, steelmakers like JSW Steel and Kalyani Steels have approached the Supreme Court for an early approval for regular mining by Category A mines, cleared by the Central Empowered Committee (CEC).

Steel mills, sponge iron and pig iron units in Karnataka require about three mt per month for full production. Steel mills in the state produce about 14 mt of steel annually.

“Even after paying higher prices in e-auctions, the availability of quality iron ore is a challenge, threatening the continuation of steel production efficiently. The steel industry in Karnataka is not only facing shortage of iron ore but poor quality of iron ore is impacting the equipment, productivity and efficiency,” Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel, said.

He said their crude steel production during February was severely affected due to usage of inferior grades of iron ore. Certain iron ore in e-auctions contained high alumina, silica, manganese and low Fe, which led to poor sinter quality, high slag formation and low productivity in blast furnaces, he said.

Many units in the state are not in a position to make use of the low-grade ore due to non-availability of technology to beneficiate such ore, except JSW Steel. “We are largely using calibrated ore in our steel plant and already the stocks are over. We have very limited quantity available with us and we cannot use the low-grade ore. It is the end of the road for us if the Supreme Court does not permit resumption of mining in the near future,” said R K Goyal, managing director (MD), Kalyani Steels.

However, the mining industry feels even if the apex court approves mining by the Category A mines, it would take at least two to three months for these to restart. “We do not know at this stage what conditions the court will impose on miners. As it is, we have to put in place a rehabilitation and resettlement (R&R) plan. We have been asking the court to give permission for Category A mines to restart immediately,” D V Pichamuthu, director, south, Federation of Indian Mineral Industries, said.

The preparation of an R&R plan as recommended by CEC is likely to take more time and unless this is done the court will not approve mining, industry sources said.

“No mine can restart mining unless the R&R plan is put in place. Once the R&R plan is done, mining companies will have to take approval from the monitoring committee and then start the mining. In our opinion, it would take at least three months after the court gives permission to restart mining and bring ore to the market,” an MSPL spokesperson said.

Basant Poddar, MD, Mineral Enterprises Ltd, said, “Some miners are ready with the R&R plan and they can start mining immediately. We have all the infrastructure and logistics in place to restart mining immediately once the court approves. We can ensure at least five-six mt of ore is made available per annum from such mines.”

Out of the remaining 10 mt, hardly four mt is high-grade ore (63 Fe and above) and the balance is 52-53 Fe grade, which is not suitable for use by many mills, he said.

“The ore made available through e-auctions in Karnataka is hardly sufficient for a few more days and we fear that we may have to close our steel production if there is no early decision on resuming regular mining,” Goyal said.

He has written to the chief secretary of Karnataka, the director of mines and geology, and the CEC, urging them to help restart regular mining in the state. “We are living on expectations of regular mining. We hope the Supreme Court would give clearance soon to restart mining in their next hearing on March 16,” Goyal added.

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