SC gives the state two weeks to frame export rules.
The Supreme Court on Tuesday gave the Karnataka government two weeks to put in place new rules for exporting iron ore from the state. The state had banned iron ore exports last July following allegations of corruption.
The state government told the court it had notified the rules for transport and export of iron ore. It sought two weeks to build the infrastructure to implement the rules. The court gave the government time till April 20. The ban will continue till then.
India is the third-largest iron ore exporter with average annual exports of 100-120 million tonnes. Karnataka is one of the major producing states. Its average annual production is 30 million tonnes.
The ban has hit exports. According to data from the Federation of Indian Mineral Industries (Fimi), exports during April-February were 85.43 million tonnes, down 18 per cent from the corresponding period of the previous year.
Experts say Tuesday’s decision is expected to lead to a spurt in volumes as mines in Karnataka re-start operations. “The mines were closed after the ban. After the verdict, the volumes will rise,” said Rahul Baldota, executive director, MSPL.
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The mining industry is, however, less euphoric than expected due to the 20 per cent duty on iron ore exports imposed in the Budget. “Even if the ban is lifted, the 20 per cent duty will make Indian ore unremunerative. Right now, it’s fine as iron ore prices are rising, but this is in the short term. The prices will ease once the demand-supply mismatch goes,” said R K Sharma, secretary general, Fimi.
Karnataka exports around 30 million tonnes iron ore, of which 95 per cent makes its way into China, mostly in the form of fines. The prices of iron ore are $160 a tonne in India while CFR China is being quoted at $180 a tonne. “The prices have been moving up or down by $10-12 a tonne. This means they will dip to the same extent. Then, Indian ore will become uncompetitive,” said Sharma.
Sesa Goa, India’s largest private sector iron ore exporter, which in 2009-10 shipped out 3.7 million tonnes out of its output of 20.5 million tonnes from Karnataka, will benefit the most. Its share price rose 6.36 per cent on the Bombay Stock Exchange on Tuesday to Rs 313.65 per share.
An analyst who wished not to be quoted said, “Exports from Karnataka account for over 10 per cent of Sesa’s exports. The company has been waiting for the ban to be lifted. Moreover, with Sesa Goa exiting mining in Orissa, it will look to mine and export more from Karnataka.” The company did not comment.
An official of a Mumbai-based steel company who wished not to be quoted said, “There is no impact on the steel companies, as we don’t use much iron ore fines.”
JSW Steel, which buys most of its ore from NMDC and local miners, has been vocal against iron ore exports. Sajjan Jindal, vice-chairman and managing director, JSW Steel, had said, “Iron ore exports should be gradually banned. I would say that there should be a calibrated approach towards banning it.” The company did not comment.
Tata Steel, too, did not comment. The company sources ore from captive mines.
The state government has been dilly-dallying on bringing a new export regime for nearly a year. It told the Karnataka High Court last year that it would draft new rules. When it did nothing for months, the exporters, led by Sesa Goa MSPL and S B Minerals, sought the Supreme Court’s permission to export the stock that had already been mined.