1. “Regulatory Reforms for Adequate Availability of Natural Resources for Manufacturing”
JSW STEEL LTD – JANUARY, 2014 1

2. Manufacturing : Soaring & growth phase…..
And the Butterfly soars…..
To fuel further growth & nectar….

3. Present Scenario – Manufacturing in Karnataka
The share of Secondary sector i.e. Manufacturing in Karnataka has fallen from 29.1 % to 28.3% of GDP to from 2005
Growth of Manufacturing Industry has a direct co-relation with the employment generation.
The share of Manufacturing in Maharastra and Gujarat is higher in comparison to Karnataka even without having the enough mineral resources.
The data indicates the scope of growth of Manufacturing Industries in the State.

4. Present Scenario of Karnataka Steel Industry
Represents >20% of Country’s Steel Production
Iron Ore Requirement 32 MTPA
Acute Shortage leading to production cut
Sponge Iron Industries : 70%
Mini Blast Furnace : 50%
Integrated Steel Plant : 30-35%
Both revenue and job losses
Cap of 30 million ton Iron Ore production has constrained the growth opportunity of the Manufacturing Sector in Karnataka.

5. Impact on Employment
Productivity of Steel Industry in India – 196 tons / man-year
Stoppage of Steel Production – 16 million ton
Loss of Direct Employment – 80,000 approximately
Loss of Indirect Employment – 800,000 (assuming 10 indirect employment are generated against each direct employment )

6. Iron Ore Reserves & Revenue
The state government receives huge tax revenue from the steel industry.
Income from Steel Production *
Steel Production (MT)
Price of Steel
Taxes (15%)
Total Taxes (Rs. Crores) 16
40,000
6,000
9,600
Karnataka is endowed with rich deposits of iron ores; with approximately 9.03 billion tonnes or about 41% of India’s estimated total haematitic and magnetitic iron ore resources
Type of iron ore
Reserves (In Billion Tons)
Proved
Probable
Total Reserves
Remaining Resources
Total Resources
STD111
STD121
STD122
Hematite
0.39
0.03
0.11
0.53
0.62
1.15
Magnetite
0.20
0.02
0.22
7.66
7.88
Total
0.60
0.13
0.75
8.28
9.03
Note 1: STD111 Proven reserves certified by GSI
Note 2+3: Est from boreholes in mine not certified
There is a potential to build 100 Million tons Steel Capacity based on the available resources.

7. Impact On GDP Contribution of Iron and Steel Industry to GDP – 2%
Weight of Iron and Steel in the Index of Industrial Production – 6.2%
Karnataka Steel Industry with more than 20 million ton production capacity represents 25% of the steel production of the country
With 25% of Steel production going out of the system
GDP will be negatively impacted by 0.5% which
mounts to $8.5 billion

8. Impact On Railways
Material Movement for each ton of Steel production – 4 tons
Total Material Movement for 16 million ton of Steel Production- 64 million tons
Material Movement through Railways – 80% of total
Stoppage of 16 million ton Steel Production would lead to revenue loss of approx Rs. 4,000 crores to the Railways
Loss to the road transport will be additional

9. Present Status of Iron Ore Mining Operations
Source
Total Mines
In Operation
No. of Mines
Production
(in MT)
Category ‘A’ and ‘A1’ 44 11
5.12
Category ‘B’ and ‘B1’ 69 4
3.62
NMDC 2
9.00
TOTAL
115 17
17.84
‘5’ Mining Leases cleared by Monitoring Committee - Yet to resume operations (Qty.: 0.85 MTPA)

10. Lack of resource & its impact…..
Fe in input: reduced from 60% to <50%
Al2O3 increased from 4.5% to 10%
Impact:
Very high slag rate operations
Equipment in SMS deteriorating
Productivity reduced
Uncertain future but hope remains
About 10 lakhs jobs impacted
Operations of steel and other plants is on brink of defeat….

11. Manufacturing Growth - Stalled

12. Mines Awaiting Lease Renewal
Mining Lease/plan Clearance pending A A1 B
Approved by IBM
No of Mines 1 4
Approved capacity (MMT)
0.008
1.060
0.658
Applied for Renewal by lessee
1.048
Pending with Lessee 2
0.425
0.806
0.276
Total 3 5 12
0.433
1.866
1.982 20
4.281

13. Forest Clearance pending
Mines Awaiting Forest Clearance
Forest Clearance pending
Quantity in MMTPA A A1 B
Pending at District Level
No of Mines 1 2 8
Approved capacity
0.008
0.310
1.203
Pending at State Level 4
0.380
0.642
0.779
Pending at Central Level
1.076
0.35
Total 13
0.388
2.028
2.332 23
4.75

14. Proposal Steel Industry whole heartedly support:
Clamp down on illegal mining
Conservation of environment
Optimum exploitation of iron ore in the national interest
Reclamation & Rehabilitation of environment as suggested by CEC
The huge investment & employment to the people of India & economic interest of the nation warrant continuous iron ore supply to the domestic steel industry
To discourage export of Iron Ore and Pellets
The long term solution for conservation of environment and optimum exploitation of minerals is CAPTIVE MINING FOR VALUE ADDITION

15. Suggestions – Way Forward
Clearance of Mines Lease renewal
Forest clearance – Temporary working permission
Auction of ‘C’ category mines
Grant of fresh lease for value addition / captive consumption
Sustainable development approach
Smooth transfer of land
Setting up single window clearance for various licenses
Enterprise friendly incentive schemes