Iron ore mining in Odisha seems to
be at the crossroads today. Most of mines remain closed and the road
transportation of ore has come down drastically as stricter regulations have
made transportation of ore to railway sidings extremely cumbersome.
Accumulation of iron ore fines
poses serious constraints to mining operations. Moreover, high freight on iron
exports has made export of iron ore fines a losing proposition for the miners.
The proportion of lumps has come
down from 60 per cent in 2006-07 to 47 per cent in 2010-11, whereas the
proportion of fines has increased from 40 to 53 per cent in the same period.
This means that, as one mines deeper, there is a higher generation of fines.
While calibrating as well as
handling (loading and unloading) lumps for supply to sponge iron plants
(6mm-18mm) and steel plants (10mm-40mm), there is further generation of fines.
The ultimate proportion of fines works out to 70 per cent in Odisha.
Unless fines are evacuated from
the mines, there cannot be further production of iron ore for supply to
domestic industries. Since domestic demand for fines is limited, the only alternative
is to export. The export of fines, therefore, is not by choice but out of
compulsion.
For a distance of 660 km from
Barbil to Paradip, the Railway charges Rs 910 for a tonne of iron ore supplied
to domestic steel plants but for exports, the charges are Rs 2,879- Rs 1,969
more.
Similarly, for the 395 km from
Barbil to Haldia, the charges are Rs 587 if supplied to a domestic steel
industry but, if exported, the charges are Rs 2,842, or Rs 2,255 more.
Such a high rate of freight is
making export of iron ore fines unviable. There is, therefore, an urgent need
to bring the freight rate to a reasonable level.
Export freight rate may be, at
the most, twice the domestic freight rate. The recent hikes in the development
and busy season surcharge should also be rolled back.
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