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India has eased restrictions on iron ore mining in Karnataka, allowing 63 mines to resume operations. The Supreme Court of India ruled that these mines either had no illegal activities or only minor violations, marking a significant step for the state's mining sector. However, miners remain on edge as they await the court’s decision on the ongoing ban in Goa, another major iron ore-producing region.
This ruling is expected to boost iron ore production in Karnataka to approximately 15 million tons in the 2013 fiscal year, a rise from the previous year but still far below the 40–50 million tons produced before the mining ban. The relaxation of the ban comes after years of turmoil caused by corruption scandals and legal actions that halted mining activities in the region since 2011.
The mining restrictions have significantly impacted steel companies like JSW Steel and SesaGoa, which rely heavily on iron ore from Karnataka. Production cuts and supply shortages led to a sharp decline in output, with India’s total iron ore production dropping by 8% in February compared to the same period last year. Export volumes also fell dramatically, with India exporting just 18 million tons in the 2012/2013 fiscal year — a drop to one-third of the previous year’s figure.
JSW Steel, one of India’s largest steel producers, saw its Vijayanagar factory cut production by 70% in 2011 due to the ban. However, with the recent court decision, the company’s capacity utilization has improved to 80%. Seshagiri Rao, co-director general of JSW, welcomed the move, stating it would provide much-needed relief to the industry and create employment opportunities.
Despite this progress, industry analysts remain cautious. They believe it will take at least two years for all suspended mines to fully resume operations. According to Agrawal, a mining executive at Ernst & Young, while the news is positive for steel companies, resuming production after a long shutdown is a complex process. Some mines are still not ready, and full recovery to pre-ban levels may not be achievable.
Poddar, vice president of the Federation of Indian Mineral Industries, estimates that Karnataka’s iron ore production will reach about 25 million tons once all mines are back online. However, he predicts that the 2013/2014 fiscal year output will not exceed 15 million tons — far below the 40–50 million tons seen before the ban.
Meanwhile, the situation in Goa remains uncertain. Mining there is still completely banned, and companies like Fomento Resources are waiting for clarity. Ambar, managing director of Fomento Resources, noted that even if mining resumes in Karnataka, India’s zero-export policy will continue, forcing locally produced iron ore to meet domestic demand.
To address the shortage, Indian steel companies have turned to international sources. JSW now imports 5 million tons of iron ore annually from Australia and South America. Jindal Steel has invested $2 billion in West African iron ore projects, while the National Mining Development Corporation of India signed an agreement with Brazil’s Amplus to acquire iron ore assets in Amapá.
India’s top five iron ore-producing states show a clear decline in output between the 2009/2010 and 2012/2013 fiscal years, highlighting the long-term impact of the mining restrictions. As the country continues to navigate this challenging period, the path to recovery remains uncertain, but the recent developments offer a glimmer of hope for the industry.