Iron ore mining in Karnataka: SC seeks Steel Ministry’s response on pleas to allow exports

A bench headed by Chief Justice of India N V Ramana also asked the parties to apprise it about the likely impact if it allows all the unsold ore to flood the market. The bench, also comprising Justices Krishna Murari and Hima Kohli, was hearing a batch of applications seeking removal of the ban and doing away with the condition that the extracted ore should be sold only through e-auction.
The Union Ministry of Mines had filed an affidavit in the matter, supporting the demand for allowing export, saying there was no such restriction on the ore export from other states and that the “operation of mining laws in Karnataka may be aligned with the rest of the country”.

Appearing for the mining companies, Senior Advocate Mukul Rohatgi pointed out that the SC-appointed Central Empowered Committee (CEC) had also backed the prayer to allow the export. The CEC report, he said, had recommended vacation of the SC order on e-auction, export ban, and capping the mining.

Rohatgi said the SC had imposed the restrictions as it found rampant illegal mining and also because the domestic market was not getting adequate ore, and added that the situation has changed now.

Senior Advocate Dushyant Dave, also appearing for a mining company, said it doesn’t serve public or environmental interests to keep the extracted ore unsold. “It is the most unfair system which has been worked out, I don’t know how it has been allowed to perpetuate. The buyer can import, but sellers can’t sell without e-auction. Nobody’s interest is served with these orders, neither public interest and certainly not environmental interest,” he submitted.

Backing the prayer to lift the ban on export, Senior Advocate Rakesh Dwivedi said the government policy is to promote export which is evident from the fact that the duty on export of the ore has been reduced from 5 percent to zero.

The CJI then wondered what the situation would be if it allowed the existing stock to be sold.

Dave said: “Today there is a huge shortage of all those metals in the world and the country will benefit the most because prices have shot up…so, it’s not going to hurt the domestic producers (of steel).”

Additional Solicitor General K M Nataraj said “the ban cannot operate in Karnataka alone”.

Justice Santosh Hegde when he was Karnataka Lokayukta had pointed out that at the rate at which mining is going on, will mean that all the iron ore resources of Karnataka will be exhausted in 30-40 years. After that, the SC, which had imposed a cap of 30 million tonnes revised it to 35 million tonnes.

Advocate Prashant Bhushan, who appeared for NGO Samaj Parivartan Samuday, said there are two concerns – protection of environment and, also, inter-generational equity.

“The reason why exports were banned was also because natural resources of this country are not supposed to be plundered for profit. These are natural resources of the people…they are not for commercial profit by exporting to some other country,” Bhushan said, pointing out that there was still a shortage of iron ore for the domestic steel industry.

Intervening, Dave said if that is the case, Bhushan must file a petition against steel producers as the argument applies more to steel producers than iron ore miners. “This kind of selective damning of an industry is not good,” he added.

Senior Advocate Krishnan Venugopal said the effect of the restrictions is such that one steel-producer company is getting 98 percent of the iron ore from the state and is making windfall profits.

Dave added there is no ban on export under the import-export policy and the steel industry can’t say anything contrary to that.

Senior Advocate Kapil Sibal appearing for an association of Karnataka steel producers said the only reason why the mining companies wanted to export is because prices have shot up internationally. “They want the ore to be exported, not the steel,” said Sibal, adding the ore that the mining companies have in stock is what they did not e-auction.

Contesting this, Dave said his client had participated in 28 e-auctions and still had a stock of 5,52,000 metric tonnes.