India exports first iron ore cargo to China since mining ban

MUMBAI (Reuters) - India sold its first cargo of iron ore to China since a ban on mining in a key producing state took effect in October, a government official said on Monday, raising the prospect of more shipments which could cool prices that were at 15-month highs.

A cargo of 72,892 tonnes of iron ore fines mined in Maharashtra state was shipped from Goa state, where the top court banned mining in early October after allegations of illegal mining from a federal government-appointed committee.

Goa used to export almost all its annual production of more than 50 million tonnes before the ban.

"There is no ban on export of iron ore from outside the state. The iron ore in this case was mined in Maharashtra, for which royalty was paid in Maharashtra," said Prasanna Acharya, director of mines and geology in Goa's mines department.

Acharya named the seller of the cargo as Prime Minerals Exports, but the price and the buyer were not immediately available.

India used to produce about 200 million tonnes a year of iron ore and exported about half of that, with China taking the bulk of its output. Karnataka and Goa were the main producing states, and mining has been restricted in both.

India's iron ore exports to China shrank to just over 30 million tonnes last year as a clampdown on illegal mining, and exports from Karnataka, slashed both output and shipments, prompting steelmakers to operate below capacity.

Limited supply from India, which used to be the world's No. 3 iron ore supplier, has meant more Chinese business for global miners such as Vale (VALE5.SA), Rio Tinto (RIO.AX) (RIO.L) and BHP Billiton (BHP.AX) (BLT.L) at a time when they are struggling to meet sales and profit forecasts.

Benchmark iron ore prices rose last week to $158.50 a tonne, the highest since October 2011 and a 30 percent gain since December due to a recovery in demand from top importer and steel producer China. Prices have since eased slightly as Chinese buyers pulled back.

(Reporting by Siddesh Mayenkar; editing by Miral Fahmy)