‘Capping production to affect expansion of steel cos’

The Supreme Court’s verdict on capping the production of iron ore at 30 million tonne a year in Karnataka may adversely affect the proposed expansion and investment plans

Written by Priyadarshi Siddhanta | New Delhi | Published:April 20, 2012 12:53 am

The Supreme Court’s verdict on capping the production of iron ore at 30 million tonne a year in Karnataka may adversely affect the proposed expansion and investment plans of steel companies in the state,the steel ministry has cautioned. Noting that the state has already inked 53 MoUs with domestic and global players,it warned that raw material insecurity may “act as a deterrent”.

Accepting the recommendations of the Central Empowered Committee (CEC) on mining operations in Karnataka,the SC on April 13 directed that a ceiling of 25 MT be imposed on iron ore production in Bellary and 5 MT in Chitradurga and Tumkur districts.

Endorsing another recommendation of the CEC that submitted its report on February 3,the apex court asked the state to prescribe a maximum permissible annual production limit from each mining lease in these districts based on the lease area and available iron ore reserves.

The CEC has classified the mining leases in the three districts into three categories: ‘A’ category comprises 45 mines where there is no illegality. For such mines,the committee will give suggestions on commencing preparatory work and construction of stockyards. B category comprises 72 leases. Here,the CEC found illegal mining with mining pits extending 10 per cent beyond sanctioned areas and in areas where waste dumps are outside the lease. The ‘C’ category comprises 49 leases with flagrant violations of the Forest Conservation Act and mining activities in other lease areas.

The committee said mining can resume in the A category areas provided certain conditions are fulfilled including modification of mining plans,obtaining statutory clearances and finalisation of Relief and Rehabilitation (R&R) plans. For the B category mines,the CEC has recommended resumption of operations after penalties are paid and R&R conditions are implemented. It said leases of C category mines be cancelled and allocated through a competitive bidding mechanism to the end-users of iron ore.

The steel ministry has said that the future of upcoming and proposed plans depend on the assured supply of iron ore. Capping the output will not only deter future expansion of existing steel plants,but also fresh investments in the sector. It will,however,not impact the present requirement of the sector.

Accepting the recommendations would pave the way for resumption of operations in 45 leases and 72 other leases easing the supply situation.

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