India’s Orissa state, the nation’s largest producer and third-largest exporter of iron ore, is considering banning exports of the steelmaking material to thwart illegal mining and increase local supplies.
“A decision is expected soon, following which the state government will seek federal approval,” Orissa Mines Minister Raghunath Mohanty said today in an interview, without giving a timeframe. The eastern state exported about 20 million metric tons, almost a third of India’s overseas shipments of the material.
Iron ore contract prices for the local steelmakers more than doubled to $150 a ton this year after a surge in demand from India and China, the world’s two fastest growing major economies. Lower supplies from India, the third-largest exporter, which mainly ships to China, and adverse weather in Australia and Canada, may further push up global prices, BNP Paribas analysts Alok Rawat and Karan Gupta said in a report on Jan. 12.
Indian steel demand, which rose about 8 percent in the last fiscal year, is forecast by the government to grow 10 percent in the year ending March 31, helped by state spending on roads, ports and bridges.
“A decision to ban exports can only be taken by the government of India,” Mohanty said. “We can give a proposal to the centre asking for a ban.”
Karnataka Ban
Mining companies in the south Indian state of Karnataka, which barred exports of the ore from the state in July, have petitioned the nation’s top court against the decision. The miners contend that the ban was illegal as any such decision falls under the jurisdiction of the federal government.The ban in Karnataka may cut India’s exports of iron ore by 38 percent to 66 million tons this fiscal year, the Federation of Indian Mineral Industries, a trade body, estimated in August. Iron ore exports from India fell 30 percent for a second consecutive month in November from a year earlier to 8 million tons, the federation said on Dec. 22.
Orissa’s government found at least 2,823 cases of illegal mining in the five years to June 2009, the Press Trust of India reported on Jan. 3, citing a state government report. The nation suspended in December 2009 operations at 60 illegal mines to curb unlawful production in states such as Orissa and Karnataka, B.K. Handique, the then mines minister, said in May last year.