Chhattisgarh sees 33 percent output jump this year

NEW DELHI Tue Jun 4, 2013 4:15pm IST

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NEW DELHI (Reuters) - India's fourth-largest iron ore producing state expects to raise production by a third to about 37 million tonnes this fiscal year, even as mining restrictions in two other states turn the country into an importer of the steelmaking ingredient.

Chhattisgarh produced 27.7 million tonnes in the year ended March 2013, with all of that output going to local steel mills, said N.K. Xaxa, mines director of the state.

The higher production would benefit companies such as JSW Steel Ltd (JSTL.NS) which have been forced to import iron ore amid steady steel demand and falling output of the raw material.

"Demand is very high, so we are raising production," he told Reuters. "We've not been able to meet demand of the local steel companies because of some geopolitical issues."

Xaxa declined to specify why the state's output will rise this year.

State-owned National Mineral Development Corp (NMDC.NS), Steel Authority of India Ltd (SAIL.NS), Essar Steel and Chhattisgarh Mineral Development Corp are some of the iron-ore lease holders in Chhattisgarh, Xaxa said, adding that his department has sanctioned 18 leases. JSW and Essar Steel buy ore from NMDC.

India's output of iron ore is estimated to have fallen to about 140 million tonnes in the year ended March 31, 2013, from 207 million in 2011, after the Supreme Court placed a ban on mining in Karnataka and Goa states following allegations of irregularities. Output was 167.3 million tonnes for the 2012 fiscal year.

In April, the top court allowed some mines in Karnataka to resume operations subject to conditions. Goa, India's No.1 iron ore exporting state, expects court approval to resume by year-end the production and export from mines with a capacity of about 40 million tonnes.

Xaxa said he did not think there was any irregularity with respect to iron ore mining in Chhattisgarh.

(Editing by Muralikumar Anantharaman)

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