The Indian Supreme court has ordered the cessation of mining and transportation operations in Chitradurga and Tumkur districts of Karnataka. This follows a ban on mining in the Bellary district impossed on 29 July.
The court in its Aug 26 order said that the reclamation and rehabilitation of ecology in the area devastated by reckless mining will have to go together with economic activity involving industry and there had to be a balance between the two.
The ban follows the recommendation of the Central Empowered Committee (CEC), which found illegal iron ore mining in these districts was resulting in environmental damage.
However, the court noted that a stockpile of 25Mt of iron ore could be released over time so that steelmakers are not starved of raw material. It asked the steel industry to give inputs to the CEC within two days regarding their domestic requirements so that the CEC can submit to the court by September 2, the next date of hearing.
Tumkur and Chitradurga collectively produced 7Mt of ore in FY 2010-11. Production in these two districts dropped from 10-11Mt in 2009-10 due to the export ban impossed by the Karnataka state government.
There are approximately 56 operative mining leases in these two districts. There are three major producers in Chitradurga – Sesa Goa, Mineral Enterprises Ltd and John Mining. Sesa Goa had recently ramped up its capacity to 6Mt/y. In addition to these three there are a number of small mines which are collectively assumed to have a production capacity of about 1Mt.
Tumkur is primarily dominated by very small miners who operate based on market conditions.
The ore shortage is affecting other Steelmaking inputs resulting in:
– Changes in regional ore movement within India. Impacted steel mills are looking to buy partial tonnage for blending from Chhattisgarh, Jharkhand and Orissa. But domestic rail freight (Approximately US$48/t) is a barrier for large scale movement from mines in these Eastern States of India to Karnataka.
– Force Majeure on Coking Coal purchases by mills dependent on Karnataka ore.
– Imports of Metallics (HBI and Scrap) to substitute for the reduction in domestic DRI/pig iron production.
Source: Gunmeet Singh, Lead Analyst, Steelmaking Raw Materials – CRU Mumbai Office Tel +91 22 3953 7399 e-mail email@example.com