1. “Iron ore Deadlock : Breaking the Logjam”
7th September, 2013 1

2. Karnataka & its attraction
With 5% of the country’s population contributes to
6% of GDP, 7% of fixed capital & 13% of India’s exports
Nature’s bounty….
Industrial growth story….
Softer development….
Leader in Gold & Felsites
78% vanadium ore
74% Magnetite iron ore
42% tungsten ore
38% asbestos
33% titaniferous magnetite
30% limestone,
25% granite
22% manganese ore
& many more
Leader in IT services
2nd in hydro electric projects
3rd in renewable energy
Hub for automotive majors
Horticulture products
2nd largest milk producer
45% of raw silk production
20% national garment
Single largest steel manufacturing unit
Leader in education sector
Bangalore - Science capital of India
Highest number of polytechnic & engineering institutes
Peaceful work culture
Vibrant bureaucratic setup
Infrastructure
Business Leaders
Bangalore - Science capital of India with 8 reputed research centers

3. Reserves (In Billion Tons)
Iron Ore Reserves
Karnataka is endowed with rich deposits of iron ores; with approximately 9.03 billion tonnes or about 36% 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 40 Million tons Steel Capacity based on the available resources.

4. Present Scenario of Karnataka Steel Industry
Represents 25% 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. Iron Ore Production - Karnataka
PERIOD
In MTPA
43.16
37.88
13.19
9.30

6. Iron Ore – Chronology of events
29/07/11
Hon’ble SC suspended Mining & Transportation of Iron ore in Karnataka
02/08/11
Ministry of Steel through MoEF informed to Court that Steel Industry based on Iron Ore from Karnataka needs appox. 30 MTPA iron ore from Karnataka.
05/08/11
SC allowed NMDC to operate its two mines to provide 12 MTPA iron ore
23/09/11
SC allowed e-auction of 25 MT Medium & Low grade stock
13/03/12
CEC submitted report on survey by joint team with respect to categorization and R&R plan
13/04/12
SC capped the production at 25 MMT from Bellary & 5 MMT from Chitradurga / Tumkur
29/08/12
CEC submitted report for implementation of R&R and resumption of mining operations in category ‘A’
03/09/12
SC allowed resumption of mining operations in 18 leases of category ‘A’
15/02/13
CEC submitted report regarding resumption of mining operations in balance category ‘A’ & category ‘B’ mines
18/04/13
SC approved the following:
Resumption of mining operations in balance category ‘A’ & category ‘B’
Cancellation and allocation of category ‘C’ mines through auction
Grant of fresh mining leases in accordance with law

7. Status of reopening of mines in Karnataka
“A” & “A1”-Category Mines:
In Sept’2012, Hon’ble SC allowed opening of 18 “A” Mines & 12 “A1” mines with capacity of 7.84 MTPA out of which only 8 mines with 3.77 MTPA capacity have resumed operations and offered material for industries through e-auction.
“B”-Category Mines:
In April’2013, Hon’ble SC allowed opening of 34 “B” Category Mines with capacity of 8.34 MTPA where as 3-leases have resumed operation with 1.33 MTPA capacity till date. However, material offered to industries is only from 1 lease with capacity of 0.96 MTPA.

8. Lack of resource & its impact…..
Fe in input: reduced from 60% to 48%
Al2O3 increased from 4.5% to 11%
Mn in ore increased from 0.2% to 1.7%
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….

9. Iron ore availability as of now (MTPA)
Short-term Measures
Iron ore availability as of now (MTPA)
There is a shortfall of MTPA iron ore. Immediately following measures should be taken:
Sale of Sub-grade stock million tons which can help another 3 months. Sold approximately 1.5 million tons so far. Balance quantity to be expedited in Sept ‘13.
Opening of balance “A”, “A1” & “B” Category Mines by doing the needful like speedy renewal of mines & approving Forest Clearances; potential for 7 million tons.

10. Medium Term Measures
Iron ore availability after opening of “A”,”A1” & “B” Category Mines (MTPA)
*NMDC production will decrease to 7 MTPA from currently 9 MTPA
*Combine capacity of all “ A”,“A1”& “B” category mines will be 10 to 12 MTPA against R&R approved capacity of 16 MTPA due to issues like litigation, renewal, clearances in some mines.
There will be a shortfall of MTPA iron ore. Therefore following measures should be taken:
State Government should prepare Auction scheme and get it approved from Hon’ble SC.
In the mean time State Government should appoint agencies like KPMG, E&Y to prepare Auction Mechanism.
Auction of “C” Category Mines.

11. Medium Term Measures (Contd.)
Iron ore availability after opening of “A”, “B” & “C” Category Mines (MTPA)
There will be a shortfall of still 6 MTPA iron ore even after opening of “C” category mines. Therefore following measures should be taken:
On 18th April, Hon’ble SC has allowed to allocate new leases in Karnataka.
Allocation Mining leases like Ramandurga, Haddinpade etc. steel producers who have set up their facilities will be critical.

12. Breaking the Logjam Sale of Sub-grade of Iron Ore
Opening of balance category ‘A’ & ‘B’ mines in a time bound schedule
Cancellation and allocation of Category ‘C’ mines to industries
Grant of fresh mining leases
Existing value addition industry
Mineral development policy
Development of Iron Ore Mines in Western Ghats