India May Lift Iron Ore Mining Ban in Karnataka State This Month

Iron ore mining in India’s Karnataka state, banned for the past year on environmental concerns, may resume as early as this month, easing shortages of the commodity used by JSW Steel Ltd. (JSTL) and rivals.

“Some iron ore mines where no illegality has been found will be the first where mining will be allowed,” according to orders by the Supreme Court, H.R. Srinivasa, the state’s mines director and a member of a committee appointed by the court, said today by phone. Mining was halted in the state in July 2011 and extended to two other regions the following month.

Resuming mining will boost supplies to steel mills including JSW Steel, the nation’s third-biggest producer, that cut output on the ore shortage. JSW, operator of the region’s biggest factory, cut production to as low as 30 percent in September from its mill in Vijayanagar.

India’s Supreme Court allowed only state-run NMDC Ltd. (NMDC), the nation’s largest iron ore producer, to mine as much as 1 million metric tons a month and ordered all sales, including stockpiles, to be conducted through online auctions.

In April, the court ordered 45 mines to seek government approval to resume operations. Companies need an endorsement from the Ministry of Environment and Forests once their licenses have been checked, it said on April 20.

“The court process is being followed and I expect production will start showing from the second week of August,” Srinivasa said in a phone interview from the southern city of Bangalore. He’s also responsible for auctioning iron ore in the state and NMDC’s output. “The current inventory and production from NMDC will be enough to meet requirements of steelmakers till the end of next month.”

The court-appointed committee has identified 5 million tons of new ore inventory in the state that it will auction to meet local needs, he said. Since October, 23 million tons of ore have been sold via online auctions, including about 3 million tons from NMDC, he said.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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