The Hindu Business Line : Uncertainty hits Karnataka mining belt

Bangalore, Nov. 10 Once a hectic centre for iron ore mining, the Bellary-Hospet mining belt is reeling under uncertainty over its future following the virtual halt of exports to China.

A drop of 60 per cent in exports to China in October at 3.9 million tonnes underscored the agonising downturn of the once-flourishing mining industry, which provided direct and indirect employment to more than two lakh people. The drop in demand from China resulting in the crash of ore price to $50 to $55 from a peak of $135 has virtually brought the mining industry to a standstill.

With exports becoming unviable, the miners have to hold stocks, which add to their financial burden. Chinese propensity to buy in large quantities in the last five years had fuelled huge investments in the region’s real estate and hospitality sectors. But the sharp drop in imports has affected property prices.

demand shrinkage

Mr Rahul Baldota, President, Federation of Indian Mineral Industries (FIMI) and Director of MSPL Ltd, a leading exporter of ore, said steep export levy has made exports unviable at current prices. He told Business Line that even the recent announcements of reduced export duty — from 15 to 8 per cent — and cut in railway freight rates — by 25 to 40 per cent on freight rates of Rs 1,100 to 2,200 a tonne — were not viable for exporters.

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