1. “Regulatory for Adequate Availability of Natural Resources for Manufacturing”
JANUARY, 2014 1

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

3. Lack of resource & its impact…..
Fe in input: reduced from 60% to 55.5%
Al2O3 increased from 4.5% to 5.4%
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….

4. Flight of butterfly stalled…
What happens to growth, happiness and further metaphorsis…

5. 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.

6. PRESENT SCENARIO –MANUFACTURING IN KARNATAKA
The share of Secondary sector i.e Manufacturing in Karnataka has fallen from 29.1 % to 26.6 % 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.
Source : CMIE, IBEF of

7. IRON ORE RESERVES AND 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.

8. 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 15 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 amounts to $8.5 billion (at factor cost)

9. Impact on Employment
Productivity of Steel Industry in India – 196 tons /manyear
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 )

10. Impact On Railways
Material Movement for each ton of Steel production – 4 tons
(Including Finish Product)
Total Material Movement for 16 million ton of Steel Production- 64 million tons
Material Movement through Railways – 60% of total
Average Revenue of Railway per ton of Material – Rs 550 per ton
Stoppage of 16 million ton Steel Production would lead to revenue loss of Rs 2000 crore to the Railways
Loss to the road transport will be additional

11. Impact on Banks and Lenders
Investment required for per ton of Steel Capacity – Rs 40000
Total Investment for 16 million ton Steel Capacity – Rs Crore
Debt : Equity – 2:1
Total Debt – Rs Crores
Shut down of these steel plant will make the Rs crores Non Performing Assets and can destabilize the Indian Banking Industry

12. Impact of suspension of Iron ore mining in Karnataka
India is a net steel importer and suspension on mining of Iron Ore in Bellary-Hospet will lead to the closure of 24% of Indian steel capacity as the iron ore from Goa can’t be used & logistics for sourcing iron ore from Orissa & Chattisgarh do not support.
Such closure of Mining operation will lead to following ripple effects:
-Higher inflation due to shortage of steel
-Additional Forex loss to tune of $12 billion per year
-Negative impact on GDP to tune of $8.5 billion per year
-Unemployment of more 80,000 directly & several lacs indirectly
-Loss to the Ex-chequer to tune of Rs.9,500 Cr per year
-Loss to the Railways to the tune of Rs.2,500 Cr per year
-Impact on Banking system to the tune of Rs.50,000 Cr

13. 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.
The iron ore export should be discouraged across the country for the conservation of environment and optimum exploitation. Our forests and environment should not be allowed to degrade for the growth of steel industry of other countries.
The long term solution for conservation of environment and optimum exploitation of minerals is captive mining.

14. Source
Total Mines
In Operation
No. of Mines
Production
(in MT)
Category ‘A’ and ‘A1’ 44 11
5.20
Category ‘B’ and ‘B1’ 69 3
1.30
NMDC 2
9.00
TOTAL
115 16
15.50

15. Forest Clearance pending
R & R prepared - Mines Not in Operation
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
2.656
Total 14
0.388
2.028
4.638 24
7.054

16. R & R prepared - Mines Not in Operation
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 5
3.338
Pending with Lessee 2
0.425
0.806
0.276
Total 3 13
0.433
1.866
4.272 21
6.571

17. Conclusion Grant of fresh lease of value addition
Sustainable development approved
Smooth transfer for land
Setting up single window clearance for various agencies
Clearance of Mines Lease renewal
Forest clearance – Temporary working permission
Auction of ‘C’ category
Enterprise friendly incentive schemes