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The bar on mining in Bellary district by the Supreme Court would lead to negative repercussions like higher inflation due to shortage of steel, additional foreign exchange loss of 12 billion dollars a year and a slump in GDP by a margin of 8.5 billion dollars, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The industry body sought Prime Minister Manmohan Singh’s intervention and direction to the concerned ministries for interim relief from the Supreme Court to resume iron ore supplies for the steel industry with many units in Karnataka facing closure.

Any disruption in the supply of iron ore to the steel industry will result in jobs losses for 80,000 workers and several lakh others who are indirectly employed, said Secretary General D.S. Rawat in a communication to the Prime Minister. The recent directive has been a big blow to the steel industry which contributes two per cent to the GDP and its weight in the Index of Industrial Production is 6.2.

“The chamber whole-heartedly supports clampdown on illegal mining and conservation of environment by optimum exploitation of iron ore in the national interest,” says Rawat. He continues, “However, the huge investments, employment to people and economic interests of the nation demand continuous iron ore supply to the domestic steel industry.” Concerned ministries should approach the apex court for interim relief to resume iron ore supplies from public sector mines and other private mines under a suitable mechanism to ensure consistent supplies.

The mines in Karnataka supply iron ore to several large steel plants like JSW Steel, Mukand Ltd, Tata Metalliks, Sathvahana Ispat, Kirloskar Ferrous, Kalyani Steel, Visveswaraya Iron and Steel who have set up their plants with huge investments. They cannot use iron ore from other states due to lack of logistic infrastructure. Karnataka is a major supplier to Maharashtra, Andhra Pradesh, Tamil Nadu and Gujarat – especially to small and medium sized sponge iron units. These manufacturers produce 20 million tonnes of iron and steel which is 30 per cent of the country’s annual production and requires 34 million tonnes of iron ore at 80 per cent capacity utilisation.

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