A dumper truck loaded with excavated iron ore rock exits an iron ore mine. (Photographer: Vincent Mundy/Bloomberg)

Karnataka Chief Minister Seeks Prime Minister Modi’s Intervention To Curb Iron Ore Import

Karnataka Chief Minister HD Kumaraswamy has written to Prime Minister Narendra Modi, seeking intervention in iron ore import and increase basic customs duty on the mineral.

The chief minister said in the letter that Karnataka was the third-largest producer of iron ore—a key raw material used in steel making—and steel producers are importing the mineral when the country is facing a large trade deficit.

“The status of Karnataka iron ore is unique with the Supreme Court capping the annual production and restricting the sale among end-users only through e-auction,” the letter dated Nov. 19 said.

"This has led to a situation where a huge quantity (of iron ore) put up for sale on e-auction platform remains unsold...," the letter said.

Kumaraswamy requested that the import duty on iron ore and pellets be raised suitably. The "very low" import duty of 2.5 percent encourages steel players to go for import rather than utilising the local ore, he said.

"The state has already lost more than Rs 600 crore during the last and the current financial years because of import,” Kumaraswamy said. “The unsold stock may lead to closure of mine operations."

Earlier, the apex mineral body Federation of Indian Mineral Industries had sought government support to open up Karnataka's iron-ore rich mining industry, which cannot export the mineral due to a Supreme Court ruling. In this regard, it also wrote letters to the ministries of steel, mines and commerce, and Niti Aayog.

The body requested the government to take immediate steps to encourage export of iron ore from the state and also demanded an increase in the duty of iron ore and its pellets to 30 percent to curb imports. The federation also said that a stock of 40 million tonnes of mined iron ore was lying unsold in Karnataka.