Karnataka Iron Ore Exporters Seek Permits.

Iron ore traders in Karnataka said they had applied for export permits to test the market and the administrative system as a nine-month ban was lifted temporarily by the Supreme Court.

On 5 April, the apex court ordered the state government to lift the ban with effect from 20 April on movement of iron ore meant for exports and said the next hearing in the case of exporters versus the state government would be held in the first week of May.

“It is risky no doubt. What will be the final outcome of the case, we are not sure, but we want to move the material,” said K. Somasekhar, managing director of ILC Industries Ltd, a large miner-cum-exporter in Bellary district.

Somasekhar said the department of mines in the state had not given the permits. “They are giving some excuse or the other,” he said.

Karnataka, the nation’s second largest iron ore producer after Orissa, accounts for about a quarter of India’s total iron ore exports of over 100 million tonnes a year.

But the state government under the leadership of chief minister B.S. Yeddyurappa banned exports of iron ore from 10 ports in July last year and subsequently stopped issuing transport permits for the commodity to be moved to other ports for exports, citing a drive against illegal mining and the need to preserve the resource for local steel firms.

“The (foreign) market is alright. Today we haven’t got the permit. Tomorrow and day after are holidays. Let’s see if we get it on Monday,” said Rahul Baldota, executive director at MSPL Ltd, one of the petitioners challenging the ban in the Supreme Court.

A metals analyst at a foreign institutional brokerage, said that exporters were also under pressure to reduce inventories before the monsoon, which runs June to September, and, therefore, had applied for export permits, even though chances of the ban getting reinforced could not be ruled out with the case still not over.

“I think miners will make the most of any temporary relief to exports,” the analyst said. He declined to be named.

In a separate matter that has a bearing on the case, a Supreme Court-appointed committee last week recommended a crackdown on illegal mining in Karnataka, including cancellation of mining leases.

The Central Empowered Committee indicted the Karnataka government after it found that the administration officials aided in illegal mining. The case will come up for hearing in the weeks ahead.

Developments in Karnataka are being watched in the international iron ore market, where India is the third largest exporter behind Australia and Brazil. Indian miners mainly supply to China, which has the world’s largest steel industry.

Indian steel makers have campaigned against iron ore exports as they want more of the resource available to them locally at low prices, but the miners contend that most local plants do not have the technology to use the powdery fines that are a by-product of lumps.

Iron ore prices on Thursday were at $185 (`8,196) a tonne with freight for the benchmark 63.5% grade, less than the $200 a tonne level seen early this year. It’s still more than 13% higher than $163 a year ago owing to improving demand from China.

Source : livemint.com