Seven months after the Supreme Court issued the order to curtail rampant illegal mining by banning all forms of mining in Karnataka; the future of the Rs. 45,000 crore steel industries in the southern state is at stake.
Contrary to the popular perception that enough iron ore would be available for steel mills within the state to sustain business until July, when operations are to resume, the industry says supply may run out as early as this month end, bringing 23 per cent of the country’s steel capacity to a closure.
The apex court had imposed a blanket ban on all mining activities in Karnataka in August last year. In a temporary arrangement, aimed at helping the steel industry survive in the interim, the court had allowed daily auctions of iron ore from existing stocks, apart from directing state owned NMDC Ltd to operate two of its mines to supply a total of a million tonnes every month.
With the auctions remaining largely deficient in meeting demand, owing to cost and quality issues, and NMDC failing to supply even half of the committed 1 million tonne, the future of investments worth Rs. 56,000 crore, in addition to Rs. 25,000 crore debt exposures, is at stake. So is Rs. 7,000 crore of annual tax revenue and the livelihood of thousands of workers.
The steel industry in Karnataka comprising a little over a dozen companies, including JSW Steel, Mukand, Sunflag Steel, TATA Metaliks, Kalyani Steels and Kirloskar Ferrous churns out 15 million tonnes steel annually, using this ore. None of these companies have captive mines linked to their projects and are, therefore, forced to procure their entire raw material requirement from merchant miners.
