Iron Ore to Steelmakers Increases as Indian State Restarts Mines

Karnataka, India’s second-largest iron ore producing state until a 2011 court ruling restricted mining, is set to increase supplies to steelmakers as banned quarries restart operations after meeting environmental norms.

“About half of more than 100 miners have been allowed to restart mining based on the court-laid out conditions,” S. Shankarnarayana, Karnataka’s mines director, said today in a telephone interview. “Output from some of these mines has started reaching the market.”

Miners including NMDC Ltd., the nation’s biggest iron ore producer, will sell as much as 4.4 million metric tons in August, the biggest monthly sales since the Supreme Court eased the ban on mining in September last year. The southern province, having sold about 1.8 million tons this month, is offering mills another 2.6 million tons by Aug. 30, according to data from the state’s mines department.

The top court last year partially allowed 18 mines in the state to restart after securing required approvals. Higher supplies would benefit steelmakers including JSW Steel Ltd., which had to run its biggest factory in the state at a lower capacity because of a lack of raw material.

Sesa Goa Ltd., controlled by billionaire Anil Agarwal, is in the final stages of securing approval from the environment ministry and expects to restart mining in August, Managing Director Prasun Kumar Mukherjee said in an earnings call on July 30. Sesa, whose annual mining capacity in the state had fallen to 2.29 million tons from 6 million tons before the ban, expects to reach its original capacity by March, he had said.

“Supplies will only increase as more mines restart,” Shankarnarayana said. “Sesa is seeking a permit and the state’s output will rise further after it restarts.”

The court had halted mining in Karnataka to probe environmental breaches and allowed only state-run NMDC to mine and sell 1 million tons a month, via online auctions. While lifting the restriction, the court allowed the state to produce as much as 30 million tons of iron ore each year, saying it was sufficient to meet local needs.

Before it's here, it's on the Bloomberg Terminal.