Even as decks are being cleared for recommencement of iron ore mining in Karnataka, following the clearance from a Supreme Court panel, the Karnataka government has initiated the process of allotting fresh mining lease to Arcelor Mittal India.
Arcelor Mittal has proposed to set up a six million tonne per annum steel plant and a 750-Mw captive power plant at an investment of Rs 30,000 crore in Bellary district. It signed a memorandum of understanding with the state government during the Global Investors’ Meet in June 2010.
“We have once again started the process of identifying a suitable mining lease for Arcelor Mittal after they withdrew their earlier application for captive iron ore mining lease citing poor quality of ore. We would be conducting the hearing once again with the company before sending our recommendation to the Centre for approval,” MN Vidyashankar, principal secretary, department of commerce and industries, told Business Standard.
He said the government would conduct a fresh survey of mining belt in Bellary before finalising the new mining lease to the company.
Earlier, the Karnataka government had earmarked an area in the Donimalai region of Bellary district for allocating to Arcelor Mittal and had also sent a recommendation to the government of India for approval in mid-2010. However, the company surrendered the proposed area stating its exploration in the deposits found very low-grade iron ore (below 35 per cent Fe grade) and was not suitable to make steel.
In an official communication to the state government last year, Arcelor said it found poor quality of iron ore in the area with Fe (iron) content ranging between 30 per cent and 38 per cent, which was unfit to make steel.
“We have carried out substantial exploratory programme in the area and the studies have revealed that the Fe content (iron) in the ore is between 32 per cent and 38 per cent. The ore found here is mainly haematitie quartzite. It is not feasible for us to use such low-grade ore to produce steel and we have requested the state government to allot captive mines in some other location where the iron content is higher,” Arcelor Mittal India spokesperson said.
Meanwhile, the state government has acquired and transferred around 1,828 acres to Arcelor Mittal India at Kuditini village in Bellary district to set up its steel plant. The company requires about 4,000 acres land to set up its plant and it has deposited Rs 260 crore with the Karnataka Industrial Areas Development Board (KIADB) for land acquisition. Of this, 2,786 acres is enough to build the steel plant, while the remaining land would be used for the power plant and township, the company had said.
There are 166 mining leases operational in Karnataka. The Supreme Court, in a recent judgement, ordered for cancellation of 49 leases after it found rampant illegal mining by them. The court has also cleared 16 mining leases to restart mining and fixed a combined capacity of 8.24 million metric tonnes per annum.
Last year, the state government also recommended to the Centre for allotting captive mining leases to JSW Steel, Posco, KIOCL and Bhushan Steel among others. All these companies have plans to set up mega steel plants in Karnataka.