Karnataka based miners under the Federation of Indian Mineral Industries (FIMI) have filed an affidavit in Supreme Court to consider and grant revision of mine wise annual ceiling for production of Iron ore, within the overall limit of 30 MnT pa, applicable to the state of Karnataka, without reference to the district wise caps.
This would have the salutary effect of ensuring that the actual Iron ore production reaches 30 MnT pa and industry expects Supreme court to direct CEC for submission of a report over the subject.
Central Empowered Committee (CEC) shall consider expeditiously and take decisions wherever additional reserves have been found through subsequent exploration or overburden dumping capacity has increased due to sale of sub-grade Iron ore or additional infrastructure capacity is available due to non operation of adjoining mining leases.
The request had been filed in the backdrop of the recommendation of the CEC that the annual production of each mine in Karnataka be restricted based on the lowest of available Ore resources, dumping area and road/surface transport capacity. This is subject to the total mine wise production not exceeding 30 MnT pa, split into 25 MnT pa for the district of Bellary and 5 MnT pa for the districts of Chitradurga and Tumkur.
Lack of consistent supply of high grade Ore (i.e. availability of low quality Ore in big quantities) coupled with mismatched supply-demand ratio in Karnataka, has led to large scale purchase of Iron ore from outside the state and over 14.5 MnT in FY15 (till Feb’15) from overseas.
The sub-grade ore affects furnace operations leading to frequent breakdowns, increases cost of production, variations in quality of steel and gives way to inferior quality steel entering Indian market .
Both buyers and suppliers are unable to plan for procurement and sales respectively and there is no assurance of a certain quantity, leading to insecurity of raw material availability.
Current Status of 115 Iron ore Mines in Karnataka
| 19 Mines | Have not come forward or are not able to come forward for preparation of RNR plans, which is a clear evidence that they are not at all likely to commence production |
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| 5 Mines | R&R plans are pending approvals by CEC & ICFRE | |
| a. | 12 Lease holders | Have not approached ICFRE for preparation of RNR plans |
| b. | 7 Mines | Are involved in interstate disputes |
| c. | 3 Mines | Approvals are pending with CEC |
| d. | 1 Mine | R&R plan is under preparation with ICFRE |
| e. | 1 Mine | R&R plan is also pending with ICFRE |
| 91 leases | (Categorized in the A & B categories) Have approved R&R plans | |
| a. | 22 mines have actually recommenced operations. The total permitted production as per CEC approvals obtained is 7.4 MnT pa |
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| b. | 34 of the remaining 69 mines have approval for production less than 0.05 MnT pa* |
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| c. | 14 mines are likely to restart operations within the next 12 months i.e Jan-Mar’16 Total annual production approved by CEC is 5.4 MnT pa.Total aggregate output in 2016 taking into account the production of mines whose operations have already commenced and the 14 mines referred in this paragraph will commence production by Jan’16, will only be 12.846 MnT pa (excluding output based on ad-hoc permissions granted to NMDC & MML by Supreme Court) |
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| d. | 20 of the remaining mines are unexpected to restart operations for at least 12 months and may take up to 60 months i.e 5 yrs to commence operations, if at all they do
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| e. | 1 mine remaining has not been operated since the Lesse has sought certain revisions in R&R plans which are pending approvals. Hence, it is not clear when and on what terms this mine will recommence operations |
RNR plans- Commencement of mining operations
*a mine producing Ore at these levels is unlikely to be sustainable i.e. it may not be workable for those mines to sustain operations. As such, they are unlikely to commence operations. Production level of less than 0.12 MnT pa very severely impacts sustainability. Hence, production at levels as low as 0.05 MnT pa are not at all sustainable
The following are foreseen by the Industry:
1. In the immediate future, production in accordance with mine wise limits imposed by CEC shall not be greater than 7.5 MnT excluding output of NMDC (the actual production of NMDC in the 3 years of operations is approximately 9 MnT pa in contrast to granted permission for producing 12 MnT pa) and MML (adhoc permission to mine is 3 MnT p.a.). Iron ore availability in Karnataka even by 2020 may not be more than 12.9 MnT
2. Even taking into account NMDC and MML’s total production, maximum permissible production in Karnataka at present is not more than 19.5 MnT and may not reach 25 MnT
3. Generally, not more than 80% of permitted capacity is actually mined and production is likely to be around 15.6 MnT pa (including NMDC & MML). Production in future may go up to approximately 20 MnT pa
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