Odisha to renew some iron ore mining licences in about two months

NEW DELHI/BHUBANESWAR Fri May 23, 2014 4:23pm IST

A worker levels the iron ore in a freight train at a railway station at Chitradurga in Karnataka November 9, 2012. REUTERS/Danish Siddiqui/Files

A worker levels the iron ore in a freight train at a railway station at Chitradurga in Karnataka November 9, 2012.

Credit: Reuters/Danish Siddiqui/Files

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NEW DELHI/BHUBANESWAR (Reuters) - India's top iron ore producing state Odisha will renew in about two months licences of 10 of the 26 mines that were shut by the Supreme Court last week, a government official said, allaying fears of steelmakers the shutdown would lead to heavy imports.

The top court had ordered the closure of nearly half of the 56 mines in Odisha due to non-renewal of years-old leases. The closed mines accounted for about half of the state's output of more than 70 million tonnes last fiscal year.

"We're expediting the renewal process and hope to be able to renew the licences of 10 captive mines in about two months," U.C. Jena, Odisha's deputy director for mines, told Reuters.

The top court had directed Odisha to decide on the renewal of leases within six months and first consider applications of miners who process their own ore, such as Tata Steel Ltd (TISC.NS) and Steel Authority of India Ltd (SAIL.NS).

Jena said the 10 mines that should have their licences renewed in two months together produced about 20 million tonnes in the fiscal year that ended in March 31.

To help cover some of the shortage if needed, India's largest iron ore producer NMDC Ltd (NMDC.NS) said it was ready to raise sale volumes by 5 million tonnes above its target of 32 million for this fiscal year.

"We have no issues in raising production," NMDC's finance head S. Thiagarajan told Reuters.

"Last year from our operations in Chhattisgarh (state) we produced about 21 million tones but our capacity is 25 million. We also have stocks of about 2-3 million tonnes."

'MORAL RESPONSIBILITY'

Industry lobby group ASSOCHAM earlier this week wrote a letter to the finance ministry asking it to consider ordering NMDC to stop its contractual obligation to export up to 2.5 million tonnes of iron ore per year to Japan and South Korea.

"At this juncture when Indian iron and steel industry is struggling to survive due to paucity of key raw material like iron ore, it is the moral responsibility of NMDC to support the industry," ASSOCHAM wrote in the letter.

Thiagarajan said NMDC's exports were under long-term bilateral agreements decided by the government and hence he could not comment on that.

Citing a sharp fall in iron ore output following court restrictions on mining in various states, ASSOCHAM said the government should also remove the import duty of 2.5 percent on iron ore and pellets.

India's iron ore production fell to 136 million tonnes in 2013/14 from the peak of 218 million in 2009/10, ASSOCHAM said. Output could fall to about 100 million tonnes in the current fiscal year due to the Odisha ban, it added.

India was once the third largest exporter of iron ore, sending out a record of more than 117 million tonnes in the fiscal year through March 2010. It slipped to No. 10 last fiscal year, with estimated exports of less than 20 million tonnes.

(Editing by Muralikumar Anantharaman)

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