3 MAY, 2012, MEERA MOHANTY, ET BUREAU
NEW DELHI: The Odisha government may impose a cap on iron ore production in the state, dealing a blow to the industry reeling under closures, loss of production and a nation-wide crackdown on illegal profiteering.
A senior Odisha government official told ET on condition of anonymity that the state has begun work on restricting iron ore production to about 52 million tonnes annually. Odisha produced about 75 million tonnes in 2010-11, a third of the country's annual output of about 218 million tonnes.
The move, if implemented, will sharply cut iron ore availability for many small-scale steel producers in Chhattisgarh, Jharkhand and Odisha and could affect plans of bigger companies such as Tata Steel, Essel Mining and Sarda Mines, which supplies to the pellet plant of Jindal Steel and Power, the Delhi-based Naveen Jindal group company.
Iron ore prices may go up, shortages may increase and steel production, already hit by the ban in Karnataka, will be further affected if Odisha's plans are implemented. Production in key states is already down and the country produced only 208 million tonnes of the ore in 2010-11 compared with 218.5 million tonnes in 2009-10. The financial year ended March 31, 2012, was even more severe.
Steel firms are already crying foul. "Such caps, if they are not enlarged in a couple of years, will leave no room for additional projects," said a senior Posco executive.
A report by Karnataka's anti-corruption watchdog last year on illegal mining practices in the state's mineral-rich Bellary district and a SC investigation have forced state governments like Goa and Odisha to deal sternly with illegal mining and to consider new taxes and annual caps like the one approved by the SC for Karnataka.
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