India's Steelmakers Import Iron Ore .

NEW DELHI -- India, the world's third-largest exporter of iron ore, has been importing large quantities of the raw material in the last four months as a mining ban in the southern Karnataka state and transport curbs have hurt local supplies to steel mills.

Steel mills imported about 300,000 metric tons of ore in the March-May period, H.C. Daga, senior vice president of the Federation of Indian Mineral Industries, told reporters at a conference Tuesday.

Last year, the country's Supreme Court banned all mining activity in Karnataka in a bid to halt illegal mining and environmental degradation.

However, the court later allowed some mines to restart, so long as they meet guidelines on environment and mining standards.

Around 50 mines in Karnataka with an annual output capacity of 15 million tons are expected to restart over the next six months, R.K. Sharma, secretary general of Federation of Indian Mineral Industries, said. Of these, 14-15 mines are expected to restart in August.

"Worldwide, production is rising, but in India we seem to be moving in the opposite direction," Mr. Daga said.

Production this fiscal year will likely fall to 140 million tons from 169 million tons last year ended March 31, he added.

Miners have also scaled down output in the mineral-rich eastern state of Orissa due to transport bottlenecks, higher railway freight from mines to ports as well as a rise in export tax on iron ore fines and lumps--from 20% to 30% Dec. 30.

Iron ore exports will likely fall to no more than 40 million tons this year from around 60 million tons last year, Mr. Sharma said. Exports were 96.93 million tons in 2010-11, he added.

Lower exports are prompting miners to cut back production as domestic steelmakers don't have the technology to utilize iron ore fines or inferior grades.

India has been tightening curbs on iron ore exports as domestic steelmakers say it is important to preserve the raw material for meeting future expansion. "Ultimately, supply to domestic steel mills will be hit," Mr. Sharma said.

Mr. Daga said it was difficult to estimate the total iron ore imports this year, but said they will likely rise month-on-month.

India still ranks as the world's third-largest exporter of the raw material, although the gap is closing with South Africa, the fourth-largest supplier.

Source : online.wsj.com