FIMI seeks Karnataka government support to sell iron ore outside State

Suresh P Iyengar Mumbai | Updated on October 20, 2020

The Federation of India Mining Industry has sought the Karnataka government support to its petition in Supreme Court to sell iron ore outside the State.

The inventory of miners has been increasing as steel companies in Karnataka are procuring iron ore from other States. As per the Apex Court direction, iron ore mining in Karnataka is capped and e-auctioned only to steel companies in the State.

In January, the Supreme Court increased the cap on the production of iron ore from 30 million tonnes per annum to 35 mtpa. Moreover, steel companies have won most of the mines auctioned by the government recently and are procuring less from the e-auction.

In this scenario, FIMI had recently moved the SC to sell the unsold stockpile either in other States or export market. Following this, the Apex Court directed the Karnataka government to file an affidavit on this issue.

The export and import of ore in India are governed by the exim policy of India, but Karnataka is the only State which is not allowed to follow the same, said HM Khyum Ali, Director, FIMI in a letter addressed to Additional Secretary of Chief Minister of Karnataka.

“If the steel companies in the State can buy iron ore from outside the State, why miners should not sell their produce to steel companies outside the State?” he asked.

The restrictions in the State have favoured the steel industry, dominated by a single large steel producer. JSW Steel, which has capacity of 13 mtpa at Vijayanagar, and its group company procure 77 per cent of iron ore produced in the State. The second-largest producer is MSPL, a Baldota Group company, which accounts for 7 per cent of the iron ore produced in the State.

The annual demand for iron ore in Karnataka is pegged at 33 mtpa while the supply is estimated at 37 mtpa leading to a surplus of 4 mtpa.

Iron ore price in the State has fallen 8 per cent between March and August to ₹2,136 a tonne due to excess supply while in Odisha it has moved up 36 per cent to ₹3,050 a tonne, in line with the international trend.

Published on October 20, 2020

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