Slow growth pace in the mining sector is hurting mineral processing units in Gujarat. At least 500 small and medium mineral processing units have curtailed their operations by half over the past three months and some more are likely to follow suit as high cost of operations and dull market conditions add to industry woes.
In the prevailing conditions, industry fears mineral production may get adversely affected in the second half of the current fiscal thereby leading to unemployment and closure of units.
"The cost of operations has overshot due to high transport and electricity expenditure. The demand is also weak for some of the minor minerals like china clay, bentonite, and black trap, among others. Construction sector is reeling under crisis, which may spread to mining industry as well. Many units have curtailed their operations by 50 per cent in the present condition," said Hansraj Patel of HD Microns Ltd - a mineral processing firm based in Bhuj.
Mining industry in Gujarat is largely unorganised. As per the industry estimate, there are about 8,000 processing units in the state, while over 5,500 minor mining lease holders are located in the state. Kutch and North Gujarat region is rich with minor minerals like china clay and bentonite. Other minor minerals found in the state are calcite and talc powder. "Adding pressure to the present condition is the recent Supreme Court's order on environment clearances required for all types of mines.
The industry was reeling under slowdown for past one year and now with latest regulations, things seem to be worsening," said Jatin Patel, secretary, Gujarat Mineral Industries Association (GMIA) - an industry body for miners and mineral processors in the state.
On 27 February 2012, Supreme Court passed an order requiring quarries measuring 5 to 50 hectares to obtain environment clearance from the committee constituted at state level by ministry of environment and forests. However, later in April 2012, the Supreme Court passed an order making the clearance mandatory even for quarries below 5 hectares. For the quarries on land above 50 hectares, the central committee is authorized to grant environment clearance.
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"This has become a complex procedure for the industry. Mining is a crucial sector for the growth of economy. In the April to June quarter, mining sector has registered negative growth and we fear that this trend might continue for the rest of the fiscal," said Hansraj Patel, who is also the president of GMIA.
As per the government data, the growth rate of Index of Industrial Production (IIP) stood at (-) 0.1 per cent for April-June quarter of the current fiscal from 7 per cent in same period last fiscal. The drop is attributed to the slackness in the growth of mining and manufacturing sectors.