Karnataka ban led to pile up of 12 mn tonne of iron ore inventory

Source : IANS
Author : IANS
Last Updated: Wed, Mar 4th, 2020, 12:24:47hrs
Karnataka ban led to pile up of 12 mn tonne of iron ore inventory

Bengaluru: It is now a decade since India has been bleeding from a gash on its economys soft underbelly as a result of an avoidable high loss in precious forex earnings.

The Karnataka government had in July 2010 put a blanket ban on exports of iron ore and iron ore pellets which was subsequently upheld by the Supreme Court too. With this, Karnataka's economy began suffering and India's economic health too took a severe browbeating.


According to estimates, in the last 10 years the total revenue loss to the Government is estimated to be over Rs 10,000 crore in the form of license fee, royalty, and duties.

Closure of the 166 iron ore mines in Karnataka's Bellary, Chitradurga, and Tumkur districts since 2011 has affected 8 lakh people's jobs indirectly.

If exports were to restart, the state can well ensure a creation of minimum 40,000 direct additional jobs in the state. Surely, a figure that today's economic situation in the country could hugely benefit from.

The situation for forex earning potential is all the more worrying since the present ore prices are depressed as compared to what they were even six months ago. The prices have come down from $150 per tonne to around $105 per tonne now, which is almost by a third.

Another brutal dent in the opportunity cost and a massive blow to the Karnataka miners and to the state's revenue too. The installed capacity of pellet plants in Karnataka is about 7 million tonnes per annum and 14 million tonnes of low-grade iron ore fines are in stock, all of which can be converted to pellets. Since the steel industry does not use low-grade iron ore fines, pellets post conversion of fines are good export potential.

As a result of unfair policy-level restrictions, the sale of iron ore from Karnataka mines has fallen sharply, with domestic steel producers buying the commodity from Chhattisgarh and Odisha instead of sourcing iron ore from within Karnataka. Due to this, there is a huge pile-up of unsold stock of iron ore in Karnataka causing another major loss to the state directly.

Karnataka is the only state in the country which bans iron ore exports and the miners are forced to sell only to a very few dominant customers who on the other hand are free to import iron ore or buy from other sources including from captive mines.

The lifting of the ban will also greatly benefit the logistics and the transportation sector which have been suffering for these last 10 years.

It may be recalled that the ban on exports among other severe mining restrictions imposed in Karnataka was first imposed by the Central government to rein in illegal miners and those flouting environmental norms.

Lakhs of livelihoods have become deeply affected due to policies related to production cap, e-auction, and other such arbitrary restrictions which have achieved nothing but a continued and festering stagnation in the state's iron ore industry and an assault on its citizen's livelihoods.