As only 19 mines have started iron ore production, supply still not sufficient to meet raw material requirement of steel industry The year 2014 is set to herald better days for the ore-starved steel industry in Karnataka. The Supreme Court appointed Monitoring Committee to oversee E-auction of iron ore in the state is readying to put on auction additional 4-5 million tonnes of iron ore dumps, which contain mostly sub-grade iron ore (with Fe content of 45-50%), for auction as the demand and supply gap still remains wide. This follows the resumption of mining by Sesa Sterlite, the largest private sector miner in Karnataka, in Chitradurga district during the last week of December 2013. Sesa is expected to put out close to one million tonnes in the January-March quarter of this fiscal. The company is permitted to produce 2.29 million tonnes per annum. As only 19 mines have started production of iron ore, the supply is still not sufficient enough to meet the raw material requirement of the steel industry. Taking into account the huge gap in the demand and supply, the Monitoring Committee has decided to increase E-auction of dumps, sources close to the development said. The move follows the direction from the Central Empowered Committee (CEC) of the Apex Court. The CEC directed the Monitoring Committee to auction more dumps at the recently held review meeting with all the stakeholders of mining and steel industry, they said. The Committee, which has already sold around 4 million tonnes of sub-grade ore from 21 dumps in 2013, is readying to put on auction another 4-5 million tonnes this year to bridge the demand and supply gap in the state. The steel industry requires about 35-40 million tonnes of iron ore per annum to reach the full capacity of about 16-17 million tonnes of steel per annum in Karnataka. However, the current supply of iron ore is pegged at 14 million tonnes, which is projected to go up to 22 million tonnes provided more new mines open up mining and NMDC increases its capacity to 10 million tonnes, steel industry sources said. “There are some eco-sensitive areas where dumps are not removed. The Monitoring Committee officials are visiting mines one by one to take samples and are releasing dumps for auction gradually. We expect another 5-6 mines will be permitted to put out the dumps for auction in the fourth quarter of this year,” sources close to the auction process told Business Standard. The Fe content in these dumps is estimated to be in the order of 45-50% in many cases and considered unfit for steel making. However, there are some steel mills like JSW Steel, BMM Ispat among others that have installed new technology beneficiation plants to make use of such low-grade ore, the industry analysts said. JSW Steel has been buying huge quantity of dumps at E-auctions as the Monitoring Committee has stipulated that the entire lot has to be lifted by one single bidder. The dumps are sold in the lot sizes ranging between 200,000 tonnes to 500,000 tonnes. The auction of this material is being done as per the directions of the CEC, the official sources said. Meanwhile, the Monitoring Committee has sold 20 million tonnes of iron ore through E-auction between April and December 2013, which includes dumps and freshly mined iron ore.