In the wake of Indian Supreme Court suspending iron ore mining and transportation activities in the state and release of Lokayukta report on illegal mining, alarm bells have begun to ring, with the state’s industry chambers cautioning about the cascading effect of such a move on the economy, beating a hard blow on steel production.
The Bangalore Chamber of Industry & Commerce said that Karnataka based iron and steel companies are heading for a closure of their manufacturing activities in the next 2 to 3 days, following the court pronouncement.
They are contemplating halting iron ore mining activities in the Bellary region, severely crippling several neighboring states that depend on that iron ore affecting an aggregate 20 million tonne per annum capacity. The State supplies iron ore to numerous large iron and steel plants in Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu.
With none of the manufacturers in the belt possessing captive iron ore mines, instead depending on purchases from the open market, the apex court’s direction would mean that time is running out for the affected iron and steel manufacturers as even after curtailment of production they have very low levels of inventory which may not last more than 2 to 3 days of production.
BCIC in a statement said that “Since steel making is a continuous process and cannot be switched on and off abruptly, the long term stoppage of blast furnace and coke ovens could be disastrous. Apart from a huge financial impact, the recovery may take 8 to 12 months. There are also safety concerns to be addressed if the steel production has to be halted quickly.”
Total iron and steel produced in the state is to the tune of 16 million tonne per annum constituting about 24% of the country’s total production, which is 66 million tonnes. Other States, mentioned earlier and dependent on Bellary, have a manufacturing capacity of 4 million tonnes. Hence, a total of 20 million tonnes of iron and steel making capacity in India is dependent on iron ore from the State.
It added that “Though BCIC supports steps initiated by the Court for curbing illegal mining and conservation of the environment, suspension of iron ore mining and transportation in Karnataka would result in grave implications to the iron and steel industry in particular and the Indian economy in general. This will lead to, amongst others, high inflation, manpower layoff, idling of huge investment, socio economic unrest in the region and loss of revenues to the Central and State government.”
The Federation of Karnataka Chamber of Commerce & Industry also raised concern about the mining scenario in the state and called for a government’s revisit of mining policy. In a statement, KCCI mentioned that iron ore export needs to be regulated with the ore being made available for the States’ steel production for a longer period.
(Soured from www.deccanherald.com)
