KIOCL to benefit if SC eases curbs on Karnataka ore

The Central Empowered Committee (CEC) of the Supreme Court on iron ore mining has recommended export of pellets from Karnataka, which Union steel ministry and state government support.

If this is allowed, a major beneficiary would be state-owned KIOCL, say trade sources. In 2011, the Supreme Court (SC) had directed that ore produced in Karnataka be consumed within the country.

The Federation of Indian Mineral Industries has appealed to the SC to allow export of pellets from Karnataka's ore and the matter is expected to be heard by the end of this month. An earlier plea was disallowed in 2014, on the reasoning that it would cause a shortage, until iron ore production in Karnataka exceeded 25 million tonnes (mt) a year. Capacity has since crossed 35 mt a year, with eight 'C-category' mines expected to add more volume, as these are not restricted by district-level caps.

KIOCL's fate changed when it was asked in 2005 to shut down the iron ore mine at Kudremukh in the state. It had since been operating only an export unit (EOU) in Mangaluru, converting ore sourced from NMDC’s Karnataka mines to pellets, until 2011. The subsequent SC direction which required domestic consumption meant KIOCL could not source material for its EOU. Its attempt to find alternative sources from Goa was affected by the ban on mining operations in the latter state. It was forced to procure ore from Chhattisgarh and from Brazil.

It is ironical that in a state with billions of tonnes of iron ore reserves, KIOCL is forced to import ore, says a leading mining company. With domestic ore prices lower than the imported one by almost ~1,600 a tonne, KIOCL would at full volume of 3.2 mt be saving almost ~55 bn a year in sourcing cost, says an official.