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Steel cos banking on apex court review of mining ban

Steel companies expect some relief from high iron ore prices after the Supreme Court on Friday takes up for review the partial ban on mining imposed in Karnataka.

While hearing an appeal against its partial ban of iron ore mining in the key iron ore producing State in November, the Supreme Court allowed State-run NMDC to mine up to one million tonne per month from its captive mines in Karnataka to ease supply. The apex court directed the petitioners to approach the Indian Council of Forestry Research and Education on the issue and come back for a hearing on January 20.

E-AUCTION

Mr Dinesh Kumar Singh, Managing Director of Karnataka-based BMM Ispat, said iron ore prices in the e-auction conducted by MSTC (Metal Scrap Trading Corporation) have skyrocketed in last few months, despite mismatch in the quality offered and delivered.

“The iron ore prices are generally benchmarked to international market, but in the e-auction it is nearly double. For instance, import price of ore with 65.2 per cent iron content are quoted at $135 a tonne including logistics cost of Rs 2,500-2,600 a tonne, but the same grade sells for Rs 4,499 a tonne in the auction,” he added.

BMM Ispat requires about 3.4 million tonnes of iron ore per annum and has bought about 1.4 million tonnes in e-auction.

In contrast to the expectations of prices softening after the Government hiked export duty iron ore to 30 per cent, it has started moving up. This was largely to the sharp depreciation of rupee against dollar making imports almost unviable.

The Government will do well to consider auctioning the closed iron ore mines to steel companies that have set up production facility, said a senior official of Karnataka-based steel company.

“Steel companies will not do reckless mining to tap export market as they always want to conserve the scarce key raw material for future use,” he added

INVESTMENT

Steel and other iron-based industries have invested about Rs 75,000 crore in the landlocked Bellary-Hospet region of Karnataka due to proximity it provides for raw material. Steel companies that have presence in the State include JSW Steel, Kalyani Steels, Mukand Steels, Kirloskar Ferrous and VISL Bhadravati.

The Karnataka Government has received a proposal to set up 57 mtpa of fresh steel production capacity with an investment of $55 billion.

Global majors such as Arcelor Mittal, Posco and Severstal have shown keen interest in the State.