The consequence of illegal mining in Karnataka seems to be far more vindictive than earlier expected.
Speaking to CNBC-TV18, Mr Santosh Hegde former Lokayukta of Karnataka revealed that the total loss incurred though illegal activity in the region is close to INR 16000 crore.
His report had showed a total export of illicit iron ore of Karnataka origin close to three crore tonne between 2006 and 2010. he said that “The iron ore procured in the state was exported from the east coast, probably, Goa.”
Mr Hegde's report lists nearly 83 cases of different violations by different companies and alleges involvement of a minimum 40 players in illegally exporting the iron ore. The black listed companies include majors such as Adani Enterprises, JSW Steel, Sesa Goa and government player, NMDC.
The Supreme Court, thereafter, banned mining from Bellary first, and then, has extended the region under ban to Chitradurga and Tumkur districts recently. This is expected to hit the industry very badly in the second quarter, which is even traditionally, a down-period for metal companies.
Apart from production losses, the industry could also soon see a sharp increase in price of iron-ore, say experts. Orissa iron ore rates have already risen 9% in August and the Karnataka ban is one of the causes of this increase. On a bigger level, the ban is likely to impact the user industry such as automobiles, consumer durables, construction and infrastructure too. A cascading effect on overall prices will also push up inflation.
Speaking to CNBC-TV18, the former Lokayukta said that maybe, the government should consider restarting iron ore mining, but of course, under strict vigilance. This comes in the light that Karnataka produces 16 million tonne steel in a year, which is a little less than 25% of the country's total production. Abrupt or long term stoppage of blast furnace and coke ovens could be disastrous and apart from a huge financial impact, the recovery may take 8 to 12 months. Besides, the suspension on iron ore mining could adversely impact the country's GDP by 0.5% amounting to USD 8.5 billion.
(Sourced from CNBC-TV18)
