If a Goa-like ban is imposed by the Supreme Court in another major iron-ore-producing state, Odisha, production of the key raw material would be severely hit, making it difficult for domestic steel makers to cope with the situation. The country could once again stare at a situation of having to import iron ore, only the second time since the last fiscal when around 1.3 million tonnes (mt) had to be imported.
Last week the apex court had hinted at imposing a ban on mining in Odisha along the lines of the one in Goa while reserving its final order. Though the SC has lifted its prohibition on mining of iron ore in Goa with an annual output cap of 20 million tonnes, it has stated that mines cannot function on a deemed renewal basis. The state government would have to formulate a policy for granting fresh leases and only then can companies resume mining. The immediate impact of the order is that mining cannot resume instantly but could take at least a year or so.
In the case of Goa, the maximum number of mines were given leases around the same time in 1962 and their extension came to an end in 2007. Since then the mines were operating on a deemed extension basis, which cannot continue now.
This means Goa cannot add to iron ore production in the near future. Since the Goa output is wholly exported, it would continue to hurt the country’s export earnings.
The case of Odisha, however, is different. This state used to produce around 79 mt in 2010-11 when there was no mining ban or any kind of restriction. However, during 2013-14, after clampdown on illegal mining and attendant restrictions, output from the state fell to around 50 mt. This would decline further if a Goa-like ban — where mines on deemed extension would not be allowed to continue to operate — is imposed here too.
There are 187 mining leases in Odisha, of which 56 mines are currently functioning since they have environmental and other regulatory approvals. However, of these the mining lease of only 16 have been renewed while the remaining 40 are functioning under deemed extension. If the SC imposes a ban similar to that in Goa in the state, these 40 mines would have to stop production immediately, bringing down output by at least half. This would hurt the domestic steel industry since apart from