India: Ministry Tells Odisha Miners to Raise Iron Ore Output to EC Limits

Bhubhaneshwar (India): In the aftermath of seven working iron ore mines shutting down in Odisha, the Union mines ministry today asked all the working lessees to jack up production to meet EC (environment clearance) limits. Seven working mines were closed by government orders on January 1 this year as they failed to pay the Supreme Court ordered penalties by December 31. All iron and manganese ore lessees in Odisha were required to pay compensation for overproduction of ore done during 2001-11.

Major iron ore mines shut down including those held by Serajuddin & Company, Mesco Steel, government owned Infrastructure Development Corporation of Odisha Ltd (IDCOL) and other. Together, the seven operational mines had a combined production capacity of 20 million tonnes per annum.

A senior official with the central mines ministry said, "We have asked Odisha's miners to raise production to meet limits set under EC and other statutory approvals. There is headroom for increasing output by 20 per cent in the state. Higher production of iron ore would help cool prices and also ensure no deficit for the steel industries".

A leading merchant miner in Odisha said, the ministry's call for higher production of iron ore is to ward off artificial shortage and check prices.

Odisha, in last fiscal, was the top iron ore producer with 102 million tonne record production. The output by Odisha was more than 50 per cent share of the pan-India production of 190 million tonnes.

For the current financial year, the EC limit for iron ore production in Odisha is pegged at 180 million tonnes. While most of the top merchant producers are meeting the EC stipulated run rate for production, the mines where output is primarily low grade are not in a position to scale up output due to lack of demand for lower grade ore.

"Lower grade iron ore is getting accumulated at mines heads. Due to steep 30 per cent export duty, they cannot be exported. Also, such material is not used in the domestic market. Unless the piled up ore is liquidated, miners would not be encouraged to go for higher production", said a mining industry source.

The domestic demand for iron ore is quite subdued due to slowdown in the Indian steel industry. The country produced 191 million tonnes of iron ore in last fiscal and against this, only 107 million tonnes was consumed domestically. With the production-demand imbalance in the domestic market, iron ore stockpile at mine heads has gone up to 149 million tonnes (as on March 31, 2017). Out of this, 58 per cent stockpile is concentrated in Odisha.