The Jharkhand state government has ordered the closure of 12 out of its 17 iron ore mines due to expired leases.
This has come as a big blow to several local steel makers. Few of them have also been forced to import the raw materials due to short supplies in the state.
Earlier, Jharkhand was ranked third in the production of iron ore in the fiscal year to March, with an output of around 21 million tonnes.
"They have sent notice to close 12 mines. These include mines of Tata Steel and Steel Authority of India Limited," Reuters quoted an official of the Jharkhand state government, via telecommunication with the condition of anonymity.
Tata Steel and SAIL have the output capacity for around 19 million tonnes, which is likely to get shut down due to the expiry of lease.
When asked regarding the reopening of mines by Reuters, an official said: "It depends on the government's policy."
In May, the Supreme Court of India had ordered Odisha to temporary close 26 of their 56 mines, due to the expiry of leases.
Later on, eight of those mines were reopened, including Tata Steel, SAIL and state-owned mining group, said Dhruv Goel, managing partner at industry consultancy Steel Mint, told Reuters.
"SAIL produces 10-11 million tonnes of iron ore annually in Jharkhand and Tata Steel around 5 million tonnes," Goel pointed out.
According to Goel's estimates, SAIL and Tata Steel have iron ore stocks, which could last for around 40-45 days.
Mining curbs in states such as Goa and Karnataka have limited the iron ore, which has led to more imports this year.
Iron ore imports are expected to reach around six to seven million tonnes in the current year to March 2015, due to mining restrictions, Goel added. Imports have surged 2.6 million tonnes in April to August, following bans on mining and the expiry of lease.
Meanwhile, PTI on Tuesday reported that the government is unlikely to consider any proposal for bringing down the export duty on iron ore. The government was adamant on its decision, even after the price of iron ore touched a five-year low at around $84 per tonne in the global market.
Hence, iron ore export from India has declined as a result of exorbitant duty on shipments, which currently stands at 30 percent.
Export of iron declined to 14.42 million tonnes in 2013-14, compared to 117.37 million tonnes in 2009-10, while exports of the raw material has slipped to 2.25 million tonnes in the first quarter of the current fiscal year from 3.01 million tonnes in the same quarter last year.