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As per United Nations framework classification (UNFC) of mineral resources, total resources of iron ore in India is 28.52 billion tonne as on 1.04.2010 of which approximately 18 billion tonne is Haematite and balance is of other category. The proven reserve constitutes 74% while balance 26% is probable resource.

The resources of very high grade ore are limited and are restricted mainly in Bailadila sector of Chhattisgarh and to a lesser extent in Ballari-Hosapete area of Karnataka and in Jharkhand and Orissa.

Haematite resources are located in Orissa, Jharkhand, Chhattisgarh, Karnataka, Goa, Maharashtra, Andhra Pradesh and Rajasthan. Magnetic resources are located mostly in Karnataka.

The Haematite resources are mostly concentrated in states of Odisha and Jharkhand while a smaller portion is in Chhattisgarh and Karnataka. Karnataka holds the largest reserve of Magnetite ore which lies in the eco-sensitive Western Ghats which at present cannot be mined with available technology.

 

Iron ore Scenario in Karnataka

The iron ore mining industry in the state of Karnataka went through a turbulent time during 2009-2011 when illegal mining by a few mafia brought bad name to the entire mining sector. After various interventions in form of judicial orders and administrative orders, the state has restarted sale of iron ore through Monitoring Committee constituted by Central Empowered Committee (CEC), in Sept 2011.

The present sale of iron ore is through e-auction conducted by MSTC. MSPL Limited has started offering it’s iron ore through these auctions. At present two mines of MSPL, Vyasanakere iron ore mines and Iyli Gurunath Iron ore mines (under Ramgad Mining and Minerals) have started operations after clearance from CEC.

Sale of Iron ore pellets

Prior to 2006, Indian steel sector was majorly using iron ore lumps as feed material. Few integrated steel plants had the capacity to use fines through captive sinter plants. The lower usage of fines, which constitute approximately 60% of the mined output was a big challenge. Accumulation of fines at mine head was an environmental hazard as well as lowered overall mining output due to limited space. In order to facilitate the usage of fines for domestic consumption, Government of India promoted setting up pellet plants where the loose fines can be agglomerated in form of a lumpy iron ore having defined properties. The present capacity of pellet making in India is more 63 Million Mt as on Jan 2014, which includes captive capacity of aprox 60%.

Within Karnataka, as on April 2014, 5 major pellet manufacturers have running operations. MSPL Limited is operating a 1.2 Million MTPA pellet plant for serving the domestic iron and steel industry. There are around 60 mid-sized sponge iron units located in Karnataka and nearly states like Telangana, Goa, AP and Maharashtra. MSPL Limited is a preferred supplier to most of these units due to quality and service. Pellets made by MSPL have high Fe and CCS which gives better yield to the buyers while converting into sponge iron and then to liquid steel. The consistent quality of the pellets has made a niche for itself.

Due to present judicial orders, iron ore pellets made using Karnataka iron ore cannot be exported, therefore export has been nil.

The central government further de-incentivised the export of pellets by imposing a 5% export duty.