Karnataka mining: Return to normalcy nowhere in sight!

The situation for mining and steel companies in Karnataka continues to be grim despite the Supreme Court order allowing some of the mines to resume operations.

Delays in getting clearances from government bodies and in the implementation of crucial mining plans have got the mining and steel industries worried that a return to normalcy is nowhere in sight, reports CNBC-TV18's Vineetha Athrey.

It's been three months since the Supreme Court passed an order in the Karnataka mining scam case, allowing 20 iron ore mines in the state to resume operations, adding up to seven million tonne annual capacity. These were category A mines with no allegations of irregularity. But this hasn't really translated into a flurry of mining activity. So far, only four of these mines have started operations.

Reasons? Firstly, mining leases for five of these mines have expired. Secondly, the permissible mining capacity granted to three of the remaining mines is too low to make their operations economically viable. Thirdly, implementation of the reclamation and rehabilitation plan by mining companies as ordered by the SC to prevent further environment degradation is getting delayed as is getting forest clearances by the state government.

Given this pace, miners fear that the situation in Karnataka might not return to normalcy anytime soon.

Basant Poddar, Chairman – South, Federation of Indian Mineral Industry says, "A lot of category A mines have expired. So, they will take atleast two years statutory time because you need forest clearance, environment clearance, which is time consuming, in normal times, it would take about a year, but in this state I would say two years."

The crunch in iron ore is giving the steel industry sleepless nights. Out of Karnataka's annual requirement of 30 million tonne, only around 9-10 million tonne, most of it mined by NMDC, are being met now. That means companies like JSW are being forced to import.

Vinod Nowal, director and chief executive officer, JSW Steel says, "Because of shortage of iron ore and low quality, our cost of production has gone up by Rs 4,000 more. We are now expecting SC to intervene and ensure that monitoring committee and involve state and GoI to ensure iron ore to the industry."

And with no word on the fate of category B mines still, the industry has been appealing to the Supreme Court to allow category A mines with expired leases and pending clearances to resume operations on an adhoc basis, while they simultaneously get the required paperwork done.