Steel and allied industries in Karnataka today expressed apprehensions that the industry would come to a standstill if iron ore mining is banned in Tumkur and Chitradurga districts as recommended by the Supreme Court-appointed panel.
The industry is already facing a severe paucity of the raw material after the apex court banned mining in the Bellary-Hospet region.
"At this crucial juncture, if the supplies from Chitradurga and Tumkur are also disrupted, then it would be the last nail in the coffin for the steel sector in Karnataka," Bangalore Chamber of Industry and Commerce said in a statement.
It added that "it will be a big blow for the steel sector as there is no other option than closing down the plants completely".
The issue has come up following a recent report of Central Empowered Committee that recommended a ban on mining in Chitradurga and Tumkur. It said there was loss of forest land due to illegal mining and excessive production.
"This court's July 29 order, by which the mining operations have been suspended (in Bellary), may be extended in respect of the mining leases in districts of Tumkur and Chitradurga," the report said.
The report gave findings of about 55 mining leases in Tumkur and about 18 mining leases in 687 hectare of which 500 hectare lies in the forest land in Chitradurga.
In its July 29 order, the apex court had banned mining in Bellary due to increasing environmental degradation of the area.
In its subsequent hearing on August 5, the Supreme Court provided a partial relief by allowing state-run NMDC to mine one million tonnes of iron ore per month (or 12MT a year) in Bellary region.
However, the Bangalore Chamber of Commerce said that NMDC has not been able meet even the one million tonne supply.
"It may take sufficiently long time for NMDC to reach the assured supply of 33,000 tonne per day (or one million tonne per month). The current supplies by NMDC are only in the range of 21,000 to 22,000 tonne per day as against the industry requirement of 1,04,000 tonne per day," the statement said.
Acknowledging that production has not been ramped up to the desired levels, NMDC Chairman Rana Som said the company will achieve production of one million tonne by month end.
"This month, the production (of iron ore) from Bellary may be little less than one million tonne as the apex court order came in first week of the month. But, it will surely be 1 MT from September onwards," NMDC Chairman Rana Som said.
Som said, "We are continuously ramping up productions. We produce about 30,000 tonne per day and this will be raised by another 5,000 tonne in next three-four days.
"So by the end of this month, we will achieve the targeted production levels (of one million tonne per month)."
He added that iron ore has been allocated to 46 companies as per the industry types and long-term supply contracts.
"Priority has been given to long-term contracts and companies which have blast furnaces. This is followed by sponge iron and pellet plants. We are in touch with 46 industries to supply iron ore," Som said.
However, the industry feels that NMDC alone is not sufficient to meet the demand of the industries in Karnataka.
"Demand is about 2.9 million tonne per month, while NMDC has been allowed to produce only one million tonne," an industry source said, adding, "some of the requirements were met from Chitradurga-Tumkur regions and even if they are closed, as recommended by the the CEC, there will not be any iron ore left".
The Bellary-Hospet region produces over 80% of Karnataka's total iron ore production at about 40 million tonne per annum (MTPA), while the Tumkur-Chitradurga region meets rest of the requirements.
"The impact (if mining is banned also in Chitradurga and Tumkur regions, after Bellary) is so severe that more than 80,000 people working in the industry will be rendered jobless and the livelihood of over one lakh people associated directly or indirectly gets affected," the chamber's statement said.
Following the apex court ban on mining in Bellary, many industries like JSW Steel, BMM Ispat, Kirloskar Ferrous among others, are running their operations at reduced capacities, while Kalyani Steel closed its 1.1 MT plant due to unavailability of iron ore.
"Even if we bring iron ore from other states like Orissa or Jharkhand, freight cost will be about Rs 2,000 per tonne, while production cost will increase by Rs 4,000 per tonne, making steel production too costly," Kalyani Steel's Managing Director R K Goyal said.
He added that "we have no choice but keep the plant closed as we don't have iron ore."
Echoing similar sentiments, Kirloskar Ferrous' Managing Director R V Gumaste said, "We are running our pig iron plant at 50% capacity, but we hardly have iron ore stocks of another 10 days. So we are clueless on how to run our operations."
Kirloskar has a 4,00,000 tonne per annum capacity pig iron plant, with two furnaces and it also produces 60,000 tonne iron castings for the automobile industry.
