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BW Businessworld

Endangered Species

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Is India's Steel Industry on the verge of breaking down in Karnataka? The Supreme Court's ban on iron ore mining in Bellary based on the findings of Lokayukta N. Santosh Hegde, is forcing steelmakers to shut shop.

India's largest steelmaker, JSW Steel, shut two of its plants at Vijayanagar on Wednesday, cutting production by 40 per cent. The factory will shut down completely by Monday unless they get iron ore, say officials.

JSW Steel is named in the Lokayukta's report on illegal mining in Bellary. The company denies charges of illegal procurement and transportation of iron ore. Seshagiri Rao, joint managing director, is emphatic that every tonne of ore bought is against valid purchase orders.

Of the 60 mines for which surveys have been completed in Bellary, 45 mines were found to be involved in illegal mining. The Central Empowered Committee — constituted by the court to protect habitats threatened by uncontrolled industrialisation in forest areas — observes that only 10 per cent of iron ore production there may be legal. The Lokayukta, an anti-corruption ombudsman, has pegged the losses due to illegal mining at a staggering Rs 16,000 crore.
The report, which describes the methods used by companies, officials and ministers to defraud the government, names more than 100 companies, including NMDC, Adani Enterprises and JSW Steel.

After the report led to the exit of Karnataka's chief minister B.S. Yeddyurappa, public wrath is directed at the big steel makers. What the companies will need in this crisis is nerves of their own steel.

(This story was published in Businessworld Issue Dated 15-08-2011)