In the present time the Iron Ore business in India is facing the most of troubles since the market flooded with the news of major scams in the mining industry.
The First State in India, which came under scanner, was Karnataka state. The mining scam in the state of Karnataka is known to every individual in India. Further, other mineral rich states in India are also under scanning for any other scams. Among them, Goa is now undergoing inquiry by the Shah Commission and more inquiries will be faced by other mineral rich states in India, disturbing the regular supply of raw material to steel industries.
Due to the ban on Iron Ore mining in Karnataka, the most affected are the steel industries which are left with no choice. The steel plants located in Karnataka are looking for option to receive timely supply of Iron Ore from other states like Orissa, Jharkhand and Chattisgarh. The iron Ore supplies from these states however, is costing them higher than the eAuction taking place in Karnataka State. The main reason for this is the timely supply. Most of the steelplants which are purchasing via eAuction are facing delay and logistical constraint. On the other hand, the material supplies from other states are costlier but confirms the timely supplies.
The steel plants are searching for more option for transporting maximum iron ore from other states. The supplies of Iron Ore from other states have resulted in the increase of the steelmaking cost by steel plants in Karnataka and are expected to rise further if the ban continues.
Though the international prices of iron ore has crashed on the price index, but still the private mine owners haven’t relaxed any prices. The reason may be heavy demand from the domestic plants in India which are still facing the acute shortage.