Yearender: Worst not yet over for India's mining sector

Dec 29 2013, 16:39 IST
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SummaryWhile ban on iron ore mining in Goa continued throughout 2013, production of the mineral in Karnataka is yet to stabilise.

have been deprived of the precious foreign exchange."

Rejection of Vedanta's bauxite mining proposal at Niyamgiri hills in Odisha by the tribals was among the other major issues which hogged the limelight in 2013 for Indian mining sector.

This led to Vedanta Chief Anil Agarwal expressing regret over setting up Rs 5,000 crore Lanjigarh alumina refinery and stating that his firm is now looking at securing some other bauxite mine in the state.

To bring back the mining sector on track, the government contemplated reducing duty on iron ore exports during the August-September period after the official data showed that Indian GDP growth had plunged to a decade low of 4.4 per cent. However, it dropped the idea following opposition from the Steel Ministry and steel companies.

Output of the mining sector, with a weight of about 14 per cent in Index of Industrial Production (IIP), had shrunk by 2.7 per cent during April-October as against a contraction of 1 per cent.

The category's biggest contributor, iron ore, is expected to end at around the same levels of 2012-13 (136 MT) in the current fiscal as well, which will be a decline of over 62 per cent from the peak of 218 MT achieved in 2009-10.

The mining ban also led to Indian firms going for large scale iron ore imports in 2013, which was in stark contrast to India's image of being third largest iron ore exporter. While there is hardly any export happening, imports are expected to be around 7-8 MT in 2013-14.

While Karnataka, being the bigger economy, sustained the nearly 2-year long mining ban as it has many other industries to contribute, the apex court-imposed ban of October 2012 hit hard the Goan economy, where a third of the population is dependent on iron ore mining.

In January, the Goa governor pegged the loss to state economy at Rs 20,000 crore for 2012-13.

In November, the apex court, gave a partial relief and allowed e-auction of nearly 11.48 million tonne of extracted iron ore lying unused in the state but it will be monitored by a 3-member panel and the money will not be released till the Court finally decides on the matter.

Besides, the court ordered the setting up of a 6-member panel to conduct macro-environmental impact assessment studies and suggest an annual cap on volume of iron ore. The Committee has been directed to file its report by February 15, 2014.

For miners in Karnataka,

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