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When he was chairman of Steel Authority of India Ltd (SAIL), Sushil Kumar Roongta had a major role in convincing New Delhi that India was advantageously placed to become the world's second-largest steelmaker. He argued the rich deposits of iron ore here, if properly harnessed, would enhance India's steel capacity to 300 million tonnes (mt). This is despite our growing dependence on coking coal imports which in 2013-14, stood at 33.3 mt.
Roongta said while the blast furnace would remain the principal steelmaking route for India, technology breakthroughs such as Finex, developed by South Korean company Posco, would allow us to make steel with iron ore fines and non-coking coal, local deposits of which are 295 billion tonnes (bt). India has iron ore resources of 30 bt and these are to rise 5-10 bt as the cut-off point of iron content in ore is reduced from 55 per cent to 45 per cent. So, the country's long-term self-reliance in this critical steel input is not to be doubted.
India's high ore imports in recent times have resulted from significant dislocations in mining in more than one state. Unlike India, China is becoming increasingly dependent on iron ore imports to sustain its ever-rising steel production. In 2013, as China raised its share of world crude steel production to 48.5 per cent, with production of 779 mt, it also imported a record 820 mt to supplement domestic supplies.
To the dismay of our steel, sponge iron and pellet producers, dark clouds have started gathering over the iron ore sector in Odisha. The mineral produced in Odisha has a strategic bearing on the steel sector in eastern states, which account for 60 per cent of the country's 80-mt annual metal output. Not only is Odisha the largest iron ore producing state in the country but domestic steel producers covet its lump ore and pellet makers its ore fines for their high quality. Odisha ore has iron content of at least 62 per cent. It is highly blast furnace-friendly for its hardness and low alumina, silica and phosphorous content. But now, the proverbial sword of Damocles is hanging over the head of Odisha ore producers by a thread, as the Supreme Court will soon pass an interim order on mining in the state. A guessing game is underway on the likely ramifications of the impending court order on Odisha miners.
What exactly is the picture of iron ore mining in the state? Of the 187 leases, 102 are either without 'mining plans' or environment and forest clearances; 29 leases have lapsed. Of the 56 mines in operations, 16 have executed lease renewals. In all likelihood, these 16 will remain in operation after the court order. But the fates of the other 40 mines, whose lease renewal applications are pending with the government, are in a grey zone.
Making a distinction between the 14 mines seeking first lease renewal and the 26 awaiting their second or subsequent renewals, an industry official says the first group is also likely to escape closure. "It's a case of your guess is as good as mine. Nobody knows what will be the exact implications of the order for mining in Odisha."
Quite bizarrely, mines stand the risk of persecution even while the state government takes an inordinately long time to renew leases. Now, the Odisha government is to introduce a system to facilitate lease renewals in six months. Miners say the challenge is to gear the bureaucracy to carry out hosts of field inspections and address mounds of paperwork at a speed it isn't familiar with.
Credit, however, is due to the state government for taking steps to stamp out many wrongdoings in the sector. Mines without forest and environment clearances were decommissioned, while mines making it a habit to produce iron ore in excess of 'mine plans' were made to pay a penalty of Rs 1,750 crore, based on the net present value of the minerals mined beyond 'mine plans'. Also, Odisha has put a production cap of 44 mt of iron ore on non-captive mines.
Odisha Chief Minister Naveen Patnaik is a worried man. In case operating mines are shut, the ranks of unemployed in Odisha, described as the country's most backward state by a panel headed by Reserve Bank of India Governor Raghuram Rajan, will swell to disturbingly high levels. All mines are in remote areas, which don't have other significant economic activities. Maoists roaming the countryside with impunity will have a field day if mines are shut. State officials have started assessing the collateral damage in mines downstream by way of demobilisation of thousands of trucks, drying up of cargoes for railways and ports and starving steel mills of the mineral. Last year, Odisha produced 68 mt of ore, almost entirely for domestic use.
CLOUDED BY DOUBT
* Iron ore produced in Odisha has a strategic bearing on the steel sector in eastern states, which account for 60% of India's 80-mt annual metal output
* Odisha ore has iron content of at least 62%; it is highly blast furnace-friendly for its hardness and low alumina, silica and phosphorous content
* Of the 187 mining leases in Odisha, 102 are either without 'mining plans' or environment and forest clearances; 29 leases have lapsed
* Of the 56 mines in operations, 16 have executed lease renewals. In all likelihood, these will remain in operation after the court order
* In case operating mines are shut, the ranks of unemployed in Odisha will swell to disturbingly high level
