The Federation of Indian Mineral Industries (FIMI), Southern Region, has expressed concern over the ban on export of iron ore from the State and said “Karnataka is the only State in the country where export is not permitted”.
“After 10 years of mining ban, which was imposed in 2011, and eight years of the final order of the Supreme Court, there has been significant changes in the situation on the ground, making these restrictions redundant and requiring review of the policy framework,” FIMI said in a letter to Minister for Mines and Geology Achar Halappa Basappa.
It said the inflow of iron ore within Karnataka is such that the buyers can bring ore anywhere from the neighbouring States, even imports from other countries. But iron ore which remained unsold in the Karnataka market does not have any alternative avenue to be sold as the export market is banned.
Ore production
Karnataka produces 43 million tonnes of iron ore against the demand of 37 million tonnes per year by various dependent industries.
FIMI said Karnataka has more than adequate supply of iron ore against the demand.
“At times, there are deliberate imports of iron ore into the State despite surplus availability, creating unsold stocks. This disadvantages the domestic mining industry and under such undue pressure, prices are reduced to achieve sale targets,” it said.
Double whammy
Noting that the distorted price reduction was a double whammy since it not only reduced rightful contribution to the State exchequer — in the form of royalty and DMF among others — which was around 30% of the sales price, FIMI said it also impacts the bid premium contribution by ‘C’ category miners and auctioned miners since bid premium was directly proportionate to the sale price. Any artificial reduction of sale price directly affects bid premium.
It said: “Karnataka is the only State in the country where the entire quantity of iron ore produced has been sold through e-auction platform”. A total of 4.25 million tonnes of iron ore remained unsolddue to oversupply created by imports from Odisha.
Moreover, FIMI said “70% of the offered quantity is controlled by one dominant buyer and hence it led to subdued prices, rather than right price discovery”.
Intervention sought
The miners’ body has urged the Minister to intervene urgently and facilitate a level playing field to the State’s iron ore mining sector by allowing free market forces to operate.
