The auto components industry fears that a crisis situation might emerge in terms of raw material shortage as a consequence of the iron ore mining ban in Karnataka.

Cylinder blocks and cylinder heads that form the bulk of automobile engines are made in foundries whose key raw material is pig iron. Three large pig iron manufacturers, Tata Metaliks, Kirloskar Ferrous Industries and Sesa Goa, are fed by ore from Karnataka.

The automotive industry needs 150,000 to 200,000 tonnes of pig iron a month, says Mr Srivats Ram, President, Automotive Components Manufacturers Association (ACMA). This translates to about 3 million tonnes of ore a year.

Major (casting) companies have raw material stocks that would last till the end of the month, Mr Ram told Business Line . From next month, the situation would turn critical if the shortage of ore continues.

Basis of the ban

Mr R. Seshasayee, Chairman, Hinduja Foundries Ltd, the country's largest castings company, says that the industry can understand the basis of the ban.

To first determine who is mining illegally and who is not, might be time consuming and therefore a blanket ban is well founded.

However, this welcome step must be followed with quick action in terms of allowing those who are not violating the law to go ahead with mining, he said.

Pointing out that the castings industry was already facing hurdles, mainly in terms of slowdown in the automobile industry, Mr Seshasayee said, any shortage of raw material would “exacerbate the problem”.

Mr Srivats Ram said that it would help a little if the 5 per cent import duty on pig iron is removed, but stressed that it would not solve the problem.

Meanwhile, the industry is studying other options, in case there is no change in status quo.

To what extent can the public sector NMDC – the only company allowed to mine iron ore in Karnataka – come the industry's aid? Is steel scrap an option?

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