Iron ore shortage cripples south indian steel industry

The iron and steel industry is in doldrums in South India, following a severe shortage of iron ore. A large number of sponge iron manufacturers and small steel mills are on the verge of closure. Many of these have already shut shop.

The shortage of iron ore is in the wake of suspension of activities in almost 50 mines in this state following the direction of the Supreme Court, which is hearing a case on illegal mining. Based on the recommendation of the Central Empowered Committee (CEC), out of 99 mining leases, the apex court has ordered the shutting of 40 mines in the Bellary, Hospet and Sandur (BHS) region. For 2011-12, steel, pig iron and sponge iron units collectively require 45 million tonnes (mt) of ore, while the present availability is limited to about 24 mt, which is 48 per cent of the state’s total output. JSW Steel alone requires 27 mt for its plants in Karnataka, Tamil Nadu and Maharashtra.

Karnataka contributes 30 per cent of the national steel output, at 18.4 mt annually. “The industry fears the Supreme Court may order closure of many more mines in the BHS region and, if that happens, the availability of iron ore could be reduced to as low as seven-eight million tonnes, which will be a death blow to the steel industry in the state,” Basant Poddar, vice-president, Federation of Indian Mineral Industries (Fimi), South, said.

According to Vinod Nowal, chief executive officer and director, JSW Steel, and president of the Karnataka Iron and Steel Manufacturers’ Association (Kisma), 22 of 60 sponge iron plants in Karnataka are closed for want of raw material. Some of the steel mills like Sathavahana Ispat, Kirloskar Ferrous, Kalyani Steels, Unimetal Ispat, Sandur Manganese and Iron Ore and Sandur Laminates have suspended their operations partially.

MSPL, which operates a 1.5 million tonnes per annum (mtpa) pellet plant, is finding it difficult to source iron ore from other mines, as operations at its own 5 mtpa captive mine are suspended in view of the survey of mines by the Supreme Court committee, a company official said.

The Supreme Court appointed a four-member joint survey committee, which is yet to complete the survey of another 64 mines in the BHS region. In Tumkur district, only one out of 15 mines are presently operational, while only two-three mines are working in Chitradurga district. These two districts largely produce low-grade iron ore. BHS region contributes about 39 mt of Karnataka’s iron ore annually. But, owing to closure of several mines, the availability of ore has dropped to less than 24 mt presently. However, once the Supreme Court-appointed committee completes its survey, there could be many more closures, leading to further drop in the availability of ore, Poddar said.

“While we strongly condemn any illegal mining, the government needs to ensure supply of required iron ore to steel plants without disruption,” Nowal said.

“All the industries manufacturing steel, pig iron and the sponge iron, among others, are process oriented units and stopping/ starting of the furnaces involve huge risk and losses. To ensure continuity in the operation of the industries, there is a need to ensure the availability of iron ore to meet the day-to-day demand of various industries,” Nowal said. Kisma has written a letter to Chief Minister B S Yeddyurappa to address the genuine concerns of the sector and take remedial measures to ensure supply of adequate quantity of iron ore to the sector.

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