KOLKATA (miningweekly.com) - In a fresh blow to Indian iron-ore production and supplies, the local government in the eastern province of Jharkhand has ordered 12 of the 17 operational iron-ore mines to shut down with immediate effect.

The provincial government’s order came in the wake of the Indian government notice that all mines operating with "deemed extension of lease" under second or more renewals should be deemed to be illegal.

Affected companies included Steel Authority of India Limited (SAIL), which operates three mines in the province, Tata Steel, which operates one mine, as well as Singhbhum Minerals, Orissa Manganese and Minerals Limited, Padam Kumar Jain and M L Jain & Sons.

The balance of the mines escaped the clampdown as these had either received fresh leases or were operating under the first renewal of lease, an official in Jharkhand government said.

The total production of the mines which had been directed to close was not readily available, nor was any reaction available from SAIL on the impact that the mine closures would have on its steel plants.

The closure of the mines in Jharkhand followed a similar move in June this year to close 26, or about one-half the number of iron-ore mines operating in the eastern Indian province of Odisha for a similar reason.

Subsequently, the provincial government of Odisha permitted the reopening of seven of the mines after the miners’ leases were regularised and they submitted fresh mandatory clearances.

Even before the closure of the Jharkhand mines on Thursday, the Steel Ministry late last month issued a note of caution on the impending crisis in availability of iron-ore threatening competitiveness of domestic steel producers.

Officials said that it was too early to assess the impact of the closure of Jharkhand mines on supplies, but delays in reopening mines in Karnataka and Goa provinces would force India to increase dependency on imports, which was forecast to rise to 10-million tonnes during 2014/15, more than triple the three-million tonnes imported in 2012/13.

The import estimates for the current financial year would rise substantially with supplies dwindling from Jharkhand, the officials added.

Currently, Indian major Tata Steel, which banked on captive iron-ore mines, was seeking raw material supplies on a long-term basis from the country’s largest iron-ore miner NMDC Limited following closure of its mines in Odisha.

Over the last two months, Tata Steel had depended on merchant sales from NMDC, contracting for 100 000 t, and had now proposed a long-term agreement with the miner for regular supplies at fixed prices.

JSW Steel, which at start of the current financial year had announced plans to import six-million tonnes of ore, had revised its estimates and would now resort to an additional three- to four-million tonnes of imports to progress to higher steel production.