The Karnataka State government, which has been pleading with the Centre to ban export of iron ore, has now taken a new route to prevent private iron ore mining by rejecting fresh applications which do not highlight value addition to the iron-ore to be mined. Sources in the government say that given the limited powers of the State in the matter of granting permission for iron ore mining, Chief Minister H.D. Kumaraswamy had directed that no more applications for private iron ore mining should be entertained.

While the Centre is vested with powers to approve iron ore mining, applications for mining have to be routed through the State Government. It is here that the State has decided to apply brakes and the new directions are expected to have far-reaching implications. It is obvious that the government has taken what has been described as a harsh decision only to plug the leaks. It was another matter that the Government has been accused of "yielding to the cash-rich iron ore mining lobby for five years."

The State Government has now imposed a set of conditions, including value addition. With this decision, any private mining company can take up iron ore mining only if it has an integrated steel plant or other facilities to add value. The State government will now have to find ways of stopping the mining activities of the existing licence holders. There are several hundred private iron ore mining companies in the State and not one of them run a steel plant and they are all linked to iron ore exporting companies or directly export the ore.

Sources in the Government said the annual production of iron ore in the State was around 40 million tonnes estimated at Rs. 8,000 crore. About 75 per cent of this production was exported, mainly to China, without any value addition. "If this iron ore (40 millions tonnes) is converted into steel, the value of the end product would be around Rs. 67,500 crore at an average rate of Rs. 27,000 a tonne."

Mr. Neeraj Sharma

Neeraj Electronics

CEO, Neeraj Electronics
Jorhat, India

Free Member, Joined :06/09/2007
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