Curbs on illegal mining squeeze iron ore production to half

Last Updated: Fri, Nov 30, 2012 03:24 hrs

The government’s bid to curb illegal mining has resulted in a steep fall in iron ore production. From 208 million tonnes in 2010-11, production is expected to slide to 100 million tonnes(mt) this year.

Provisional figures from the Indian Bureau of Mines indicate t ore production during April-September stood at 72 million tonnes.

“The figure of 72 million tonnes includes a stockpile of 28 million tonnes from Karnataka that is being sold in the e-auction. The trend suggests the figure for the financial year will not cross 100 million tonnes,” said R K Sharma, secretary general, Federation of Indian Mineral Industries (Fimi).

Iron ore output (in '000 tonnes)
States 2010-11 (P) 2011-12 (P) 2012-13 (P)*+
India 207,998 169,664 72,318
Chhattisgarh 29,146 30,316 12,947
Goa 36,723 34,422 11,831
Jharkhand 23,174 20,270 8,884
Karnataka 37,878 13,269 4,401
Odisha 76,350 67,186 32,764
Andhra Pradesh 1,560 1,707 610
Madhya Pradesh 1,745 1,037 510
Maharashtra 1,520 1,425 360
Rajasthan 27 32 11
*(P)- provisional   +for april-september                 Source: Indian Bureau of Mines

Production in 2010-11, the year when the ban in Karnataka by the state government was first effected, was 208 million tonnes. Not surprisingly, the sharpest drop in production between 2010-11 and 2011-12 was in Karnataka, at 65 per cent, followed by 12 per cent in Odisha and 6.2 per cent in Goa against the national average of 18.42 per cent.

Exports have dwindled with the mineral-rich states clamping down on shipments. India, which is the world’s third largest iron ore exporter, shipped 14 million tonnes till August 2012. In 2010-11, exports were to the tune of 102 million tonnes, which came crashing in 2011-12 to 57 million tonnes.

User industries in India are now importing iron ore. Major steel producers that do not have captive iron ore mines are depending on imports. The difference in price between domestic iron ore and landed cost of import is about $30 a tonne. “If the landed cost of import is $130 a tonne, then Indian ore costs $160 a tonne,” a steel producer said.

Sharma, however, pointed out the higher prices were on account of a demand-supply mismatch. Lower availability was causing prices to increase, he said.

Availability for domestic users has been a problem since 2011 when mining operations were banned in Karnataka while Odisha and Goa also drastically reduced mining operations due to investigations by the Shah Commission.

But the genesis of the problem goes further back. In July 2010, the Karnataka government issued orders to ban the movement of iron ore. This prompted Odisha to review its export policy. Finally in 2011, the Supreme Court imposed an interim ban on mining in the Bellary district of Karnataka. Subsequently, though, the Supreme Court granted relief by allowing NMDC to mine one million tonnes of iron ore a month, though the requirement of steel producers in Karnataka is 2.5 million tonnes a month. In September, Goa, too, decided to halt mining activity on account of irregularities. In Goa, mining activity had come to a standstill, Sharma said.

India has approximately 23.59 billion tonnes of iron ore. Of this 12.906 billion tonnes is hematite ore and 10.68 billion tonnes magnetite ore (low-grade). However, 75 per cent of the magnetite ore reserves are in Karnataka and Goa.

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