The state government banned export of iron ore on July 26.
The Federation of Indian Mineral Industries (Fimi), the apex representative body of mining companies in India, has decided to drag Karnataka government to court on the issue of iron ore export ban imposed by the state. Fimi has prepared the draft writ petition which it plans to file in the Bangalore High Court in one or two days.
“We have decided to approach the honourable Bangalore High Court either on Friday or Monday on the iron ore export ban issue from the state which is affecting the livelihood of thousands and losing revenue in crores,” said D V Pichamuthu, director of the southern region.
Fimi termed the Karnataka’s iron ore exports ban from minor ports in the state unconstitutional and invalid. With effect from July 26, the state government banned export of iron ore and stopped issuing permits to transport iron ore for export from July 28 onwards.
“Since, the pipeline is not fully exhausted and transport is completely unoperational, both mining companies and steel mills are currently working normally. Once, the pipeline inventory gets over, independent steel mills will start reducing operating capacity gradually. Simultaneously, mining output cannot be stopped overnight as hundred of livelihoods are associated with that,” said Pichamuthu.
But, before the situation worsens we want judicial intervention, he added.
Meanwhile, in absence of export opportunity, inventory is continuously piling up which is gradually entering into agricultural land through rainwater seepage. This is not only affecting the environment but has also threatened the crop.
The attempt to curb illegal mining, the state government’s action has created ripple effect on the mining economy.
The operations of as many as 30 fully export oriented units have come to a grinding halt in Karnataka as more than 1 million tonne ore is lying idle at various ports causing a foreign exchange loss of around Rs 300 crore.
The freight loss to the Indian Railways is in the order of Rs 80 crore and Rs 40 crore for truckers for moving the cargo from mines to various ports. The loss of wharfage charges for ports is in excess of Rs 3.5 crore. Apart from this, the state government itself has seen a loss of Rs 30 crore by way of royalty from the mining companies.
Export oriented units like Mineral Enterprises Limited, Sesa Goa Limited, Deccan Mining Syndicate Pvt Ltd, KMMI Group, Kuminex Minerals Pvt Ltd, Alfa Exports and Doddannavar Brothers are likely to face penalty from the overseas buyers. These companies cannot even sell to the domestic buyers unless they export at least 50 per cent of their total produce in a year.
The companies are also losing lakhs of rupees on demurrage charges for holding up ships at ports in order to upload steel making raw materials for exports. For each day they have to pay $20,000 as demurrage charges. For example, Sesa Goa Limited, one of the leading exporters of iron ore from India, is currently keeping one ship at the New Mangalore Port since July 30 for lack of iron ore. India exports around 100 million tonnes of iron ore annually out of which Karnataka accounts for nearly 25 per cent.
