Federation says Karnataka is the only state in the country where export is not allowed
The Federation of Mineral Industries of India (FIMI), Southern Region, expressed concern over the state’s iron ore export ban and said that “Karnataka is the only state in the country where the export is not allowed”.
“After 10 years of the mining ban, which was imposed in 2011, and eight years after the Supreme Court’s final order, there have been significant changes in the situation on the ground, making these restrictions redundant. and requiring a review of the policy framework,” FIMI said in a letter to Minister of Mines and Geology Achar Halappa Basappa.
He said the influx of iron ore into Karnataka is such that buyers can bring ore anywhere from neighboring states, even imports from other countries. But the iron ore which remained unsold in the Karnataka market has no alternative to be sold as the export market is prohibited.
Karnataka produces 43 million tons of iron ore against the demand of 37 million tons per year by various dependent industries.
FIMI said Karnataka has a more than adequate supply of iron ore relative to demand.
“Sometimes there are deliberate imports of iron ore into the state despite the surpluses available, creating stocks of unsold stock. This puts the domestic mining industry at a disadvantage and under such excessive pressure, prices are reduced to meet sales targets,” he said.
Noting that the distorted price reduction was a double whammy since it not only reduced the legitimate contribution to the public purse – in the form of royalty and DMF among others – which was around 30% of the sale price, FIMI said that it also had an impact on the bid premium contribution of category “C” miners and auctioned miners since the bid premium was directly proportional to the sale price. Any artificial reduction in the sale price directly affects the bid premium.
He said: “Karnataka is the only state in the country where the entire amount of iron ore produced has been sold through an online auction platform.” A total of 4.25 million tonnes of iron ore remained unsold due to oversupply created by imports from Odisha.
Additionally, FIMI stated that “70% of the quantity offered is controlled by a dominant buyer and has therefore led to moderate prices, rather than finding the right price.”
The miners’ body urged the minister to urgently intervene and facilitate a level playing field for the state’s iron ore mining sector by allowing free market forces to operate.