The Hindu : Karnataka / Bangalore News : Plenty of iron ore to export, but no captive mine for VISL

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Monday, Sep 29, 2008
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Karnataka

Karnataka - Bangalore

Plenty of iron ore to export, but no captive mine for VISL

Bageshree S.

State’s only PSU iron and steel unit forced to buy ore from open market

Miners have moved Mines Tribunal against
leasing of mine to VISL
140 hectares identified in Sandur taluk for VISL

Bangalore: As much as 40 million tonnes of raw iron ore is mined in Karnataka annually and about 75 per cent of it is exported without any value addition. Ironically, the only public sector undertaking that manufactures high-quality steel in Karnataka, Visvesvaraya Iron and Steel Ltd. (VISL), is still to be granted a captive mine to supply raw material to it, thanks to a legal hurdle that has remained unresolved for over a year.

The Government of Karnataka’s recommendation to the Centre in July 2007 to reserve 140 hectares of land for granting mining lease to VISL in NEB range in Sandur taluk in Bellary district for 30 years is hanging fire because of objections by private mine owners. With the delay in disposal of the revision application filed by private miners before the Mines Tribunal under the Ministry of Mines, VISL is forced to procure ore at market price, making its survival difficult.

Sources in VISL said having captive mines was “as important as oxygen for the industry’s survival”. The company now has to procure about half a million tonnes of ore per year at an average of Rs. 2,500 a tonne, which is proving a huge liability for an industry which has barely managed to escape closure.

With a captive mine, the cost per tonne is estimated to work out to less than Rs. 1,000. A Government Order of June 20, 2007, said: “The State Government has recommended to the Government of India to impose restrictions on export and encourage grant of mining leave for captive use by the steel industry.” It says that it will not only “boost revenue mobilisation but also help in employment generation, industrialisation, peripheral development and other indirect benefits.”

Glorious history

Now under the control of Steel Authority of India Ltd., VISL was founded by Sir M. Visvesvaraya in 1918. VISL, which sourced its raw material from captive mines in Kemmangudi from 1923, had to look for other sources after mining there stopped in 2004 because of its location next to the Bhadra Wild Life Sanctuary. Since then VISL has been procuring material from the open market. Cost of acquiring raw material has been a deterrent to the hope of reviving VISL. This becomes more crucial in the light of the fact that the budgetary allocation made to VISL for 2006-2012 is much lower than that for other steel plants. While the grant is Rs. 299 crore to VISL, it is Rs. 9,000 crore for Bilai Steel Plant, Rs. 3,000 crore for Durgapur Steel Plant and Rs. 4,600 crore for Roorkela Steel Plant.

“VISL is the only public sector undertaking among the 25 contenders for the same plot. It is the only one that does value addition, while others are exporters of raw iron ore,” says Venkateiswar, a High Court advocate hailing from this region who had petitioned the Governor on speedy disposal of the revision application.

Kale Gowda, Shimoga District General Secretary of the All India Trade Union Congress, says the workers and other well-wishers, under the banner of Bhadravathi Abhivriddhi Vedike, had submitted a petition to Chief Minister B.S. Yeddyurappa to clear the hurdles in the way of giving captive mines. “But nothing has happened so far,” he said.

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