Indias Supreme Court gives green light for iron ore mining to resume

first_imgCRU reports that “in a move that will result in the restarting of iron ore mining in the state of Karnataka, India’s Supreme Court has accepted a number of the recommendations that were made by the Central Empowered Committee (CEC) in its report into illegal mining, dated March 13th. Even so, it may be two to three months before material reaches the market. Iron ore production in Karnataka will be capped at 30Mt/y (25 Mt/y in the district of Bellary and 5 Mt/y in Chitradurga and Tumkur combined).” In addition, the following recommendations have been accepted:The boundaries of mining leases should be clearly demarcated to ensure that the illegal encroachment of public land and forest areas does not take place in the futureEach mine must submit a Reclamation and Rehabilitation Plan, and this must be approved by the Supreme Court before mining can be restarted. This plan should address the issues that initially led to the mining banThe e-auction process, which has recently been used to allocate iron ore production to domestic customers, will remain in place for the next two yearsIron ore produced after the approval of a Reclamation and Rehabilitation Plan will firstly be used to meet the requirements of the domestic steel industry. In the event that production remains unsold after the e-auction process it can be offered to the seaborne market.The acceptance of these recommendations means that, subject to approval by the Supreme Court of the Reclamation and Rehabilitation Plan, mining can be restarted. For so-called ‘Category A’ mines, where minimal illegalities were discovered during the investigations by the CEC, CRU estimates that this may take two to three months. “For ‘Category B’ mines, the process is likely to take considerably longer, perhaps nine months.“Excluding mines operated by NMDC, we estimate that ‘Category A’ mines have the collective capacity to produce 11 Mt/y of iron ore. ‘Category B’ mines, meanwhile, can collectively produce around 13-14 Mt/y, and so between them these mines have the potential to account for a significant proportion of the 30 Mt/y production cap for Karnataka as a whole.“The Supreme Court’s verdict is unlikely to have much impact on the seaborne market. We expect that pretty much all of the iron ore mined in Karnataka will be consumed by the domestic steel industry and, as such, the Supreme Court’s verdict is unlikely to have much of an impact on the seaborne market. The exception to this is that the recent trend of Indian steel mills looking to import tonnages from countries such as Australia and South Africa may well be reversed. However, on the whole, we see the implications of this verdict being largely limited to its impact on the domestic steel industry:Domestic steel mills in and around Karnataka will gain increased certainty over supplies of iron ore. The stocks of iron ore available for e-auction are currently at very low levelsThe availability of higher quality iron ore will increase. This was falling as better quality iron ore was initially auctioned firstThe utilisation rates of steel mills in Karnataka will, all other things being equal, likely increase.last_img

Leave a Reply