Shortage of iron ore for steel mills in Karnataka is set to continue or even become worse. The production capacity of NMDC, the largest producer of ore in the country, is likely to be restricted to seven million tonnes per annum (mtpa) from the present 12 mtpa. 

 

The management of NMDC recently stated its capacity could be restricted in line with the recommendation of the Central Empowered Committee (CEC) of the Supreme Court. For the current financial year, it is estimated to produce nine mt of ore.

 

“According to the CEC’s recommendation, the total capacity of all approved mines would be restricted to 20 years’ mine life, which implies NMDC’s capacity would get restricted to seven mt against the 12 mt limit fixed by the Supreme Court. To mitigate the crisis, NMDC is undertaking a drilling plan at Donimalai mines to increase its reserves by 60-70 mt,” SBICAP Securities said in a report.

 

For the quarter ended June, NMDC produced 2.16 mt of iron ore at its Donimalai complex in Bellary district, a rise of two per cent over the same quarter last year. Currently, there is a supply of 13.73 mt of iron ore in Karnataka, which includes nine mt from NMDC, 4.73 mt from eight Category-A mines and one Category-B mine. This leaves a shortfall of 16.27 mtpa. The total requirement for Karnataka steel mills is estimated at 30 mtpa.