New Delhi : JSW Steel, the country's second largest steel maker, has put its 2-million-tonne (mt) expansion plan at its 10-mt plant at Vijayanagar in Karnataka on hold due to the projected iron ore shortage. Confirming this to FE, JSW Steel joint MD and group CFO Seshagiri Rao said: “The availability of iron ore is a big challenge in the state and also the Supreme Court has restricted mining of iron ore beyond 30 mt of iron ore in the state this fiscal.” The company had earlier planned to expand the Vijayanagar plant's capacity to 12 mt. JSW Steel has a total production capacity of 14 mt with 10 mt from Vijaynagar, 1 mt from Salem, Tamil Nadu, and 3 mt from Dolvi, Maharashtra, produced by JSW Ispat, its wholly owned subsidiary. JSW Steel had produced 8.5 mt of crude steel from its Vijaynagar plant in the last fiscal. Rao said due to iron ore shortages, JSW has been running the Vijayanagar plant at 80% or lesser capacity. The beneficiation plant at the Vijayanagar Complex processes low-grade iron ore as well as banded hematite quartz ores that are plentiful in Karnataka. The focus on beneficiation of low-grade iron ore has led to optimum resource utilisation, allowing the company to continue production despite supply constraints. JSW Steel's move reflects the predicament of the steel industry in Karnataka, where several companies are reviewing their investment plans and looking for locations in nearby states to set up plants. Kalyani Steels and BMM Ispat are among several others reviewing their plans in Karnataka. “We are watching the developments very closely in Karnataka. Based on the current scenario, we are not going to invest further in the state,” said Kalyani Steels managing director RK Goyal. The iron and steel industry in Karnataka has a production capacity of about 18 mt. For this, the annual iron ore requirement has been pegged at about 30 mt this year by the apex court. Recently, South Korean steel giant Posco pulled out of its proposed R36,000 crore, 6 mt project in Karnataka due to delays in securing land and opposition from locals. JSW Steel's proposed 10 mt plant in Bengal’s Salboni is not making any headway after hitting a major roadblock on sourcing of iron ore. Even after acquiring 4,000 acres for the R35,000-crore project, the Bengal government has failed to facilitate procurement of raw material for the plant. JSW's domestic rivals, however, remain on a capacity expansion drive. Tata Steel's Kalinganagar plant is expected to go on stream by September and SAIL chairman CS Verma told a news agency that the company will spend R1.2 lakh crore until 2022 to take its capacity to 50 mt. The state-owned steelmaker is currently in the process of completing an earlier expansion plan, which would take its capacity to 24 mt by next year. JSW Steel reported a 61.56% decline in consolidated net profit to R265.91 crore for the fourth quarter ended March 2013 due to a drop in sales, higher depreciation and increased interest outgo against the corresponding period of the previous fiscal.