The iron and steel industry in Karnataka on Wednesday urged the chief minister D V Sadananda Gowda to step in to save the steel industry from the brink of collapse. The industry representatives led by Sajjan Jindal, vice chairman and managing director of JSW Steel met Gowda and asked him intervene in the matter immediately and impress upon the Supreme Court to provide relief to the industry, which is struggling with the shortage of iron ore.
The industry has asked the government of Karnataka to continue supply of iron ore to the industry from NMDC Ltd under long term supply contract. They have also asked the government to conduct e-auction of the stockpile on daily basis or alternate day basis and thereby ensure timely delivery of iron ore to the industry.
The six point memorandum submitted to the chief minister also includes the implementation of 2.5 million tonnes iron ore per month to the industry at market price. Open up the iron ore mines which were found legal and within the regulatory framework by the joint inspection committee appointed by the Supreme Court to enable continuous supply of iron ore to iron and steel industry.
Later, talking to reporters, Sajjan Jindal said, "The Supreme Court appointed monitoring committee which is responsible for implementing the e-auction has given us a strong assurance that the frequency of e-auction will be increased along with higher quantity of iron ore to be put under the bid."
As per the Supreme Court directions, the 25 million tonnes of unsold iron ore stock will have to be sold through the e-auction only for the purpose of domestic consumption. In the first round of e-auction held on September 14, out of 396,000 metric tonnes put on the bid, only 272,000 metric tonnes were sold. This has a lot to do with the price fixed for the various grades of iron ore, which was found costlier for the domestic industry.
The next round of the e-auction will held on Thursday, September 29, 2011.
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Now the association has sought not only higher quantity of the ore to be brought under the bid route but also price the ore on a competitive basis.
Besides, the state government has also set up a separate committee to look into the problems faced by the iron and steel industry in Karnataka.
The government of Karnataka should expedite the process of rehabilitation and redevelopment of forests in the mining area to convince the Supreme Court to allow mining," the memorandum said.
They have also asked the government to grant mining concessions as captive iron ore mines to iron and steel industry because the balance in environment and economic development can only be achieved by allocating captive mines to the steel industry.
Presently, the ore dispatches are done between 6 am to 6 pm and the dispatches should be done as prevailing in other states like Orissa, Chhattisgarh among others, where it is held round the clock, the memorandum said.
"The industry welcomes the steps being taken by the Supreme Court for stoppage of illegal mining and protection of the environment stringent. The process of cleansing up of the entire system is a welcome move and must go on. But, unfortunately the iron and steel industry is suffering owing to lack of supply of iron ore," the memorandum said.
The steel industry in Karnataka has invested over Rs 50,000 crore in the region and their requirement of iron ore is around 100,000 metric tonnes per day (2.8 million tonnes per month). Today, majority of these steel plants have shutdown for want of iron ore, Jindal said.
According to industry estimates, over 200,000 skilled and unskilled employees have been rendered jobless. Besides, a number of ancillary and other associated industries are also severely affected and are on the verge of shutting down.
The total revenue loss to the state exchequer by non production of iron & steel is approximately Rs 6,000 per tonne in the form of various taxes such as Excise & VAT, as against a royalty of Rs 288/- per tonne of iron ore. The annual Estimated contribution of steel manufacturers in the region to the exchequer is around Rs. 4,000 crore, the memorandum said.
The state government is also likely to file a petition in the Supreme Court to highlight the various issues being faced by the steel manufacturers in Karnataka.