| NEW DELHI, April 24
NEW DELHI, April 24 Iron ore production by
privately owned miners in India's Karnataka state will likely
resume in July, the country's mines minister said on Tuesday,
after what will have been a year's hiatus due to a government
and judicial crackdown on illegal operations.
Dinsha Patel said initial production from the southern state
would go to local steel mills, but a resumption of mining means
the world's third-biggest supplier of iron ore could hope to
regain its $6 billion, 100 million tonnes average annual
exports, mainly to China, in 2012/13.
"In two to three months mining should happen, I believe the
problem will be resolved by July," Patel told Reuters in an
interview, adding exports from Karnataka should then follow. He
did not give a timeframe for such shipments.
Last week, India's top court allowed mining to restart in
mines of more than 50 hectares in Karnataka after their
environmental plans are approved, potentially bringing 4.5
million tonnes per year to local steel producers. The state-run
NMDC was earlier allowed to mine 1 million tonnes of ore every
month by the Supreme Court.
India's government has struggled to shape a mining policy
balancing the drive by miners for exports with the need to
ensure future supply to domestic steelmakers, who are ramping up
production to supply India' economic expansion.
India's steel industry is aiming to produce between 100 and
110 million tonnes by 2020, up from existing capacity of 70
million, a target that would require almost all of the country's
entire existing iron ore output.
Patel said India would continue to export iron ore until
domestic steel companies adopted technology that would allow
them to process ore fines.
"Right now about 70 percent of our exports is of fines. If
we don't export then we have a storage problem," he said. "And
even when Indian steel companies begin using fines, we hope to
have added to our mining capacity. And as long as we have
surplus we will export."
Just over half of India's annual production of 240 million
tonnes of iron ore is of higher grade, coveted by both domestic
steelmakers, who lack the technology to use ore fines, and
exporters who get a better price for higher quality.
"Our policy is clear. We have to provide for our own
industries," Patel said.
The government wants to conserve resources, but says it
opposes a blanket ban on exports. Some state governments, such
as Karnataka, want a ban. The uncertainty around export policy
has hurt India's reputation as a stable supplier of iron ore.
Illegal sales have only worsened matters. Such mining in
India is widespread and usually entails removing resources
outside permitted zones. In an ongoing case in Karnataka, an
anti-corruption ombudsman exposed an alleged $3.6 billion
exports scam and described a "mafia-type of operation" with
links between politicians and mining.
The country's Supreme Court has also cracked down, banning
mining in Karnataka last year due to environmental concerns. The
court is gradually lifting that ban.
It has also asked the state to resume exports of iron ore,
but the state government has yet to approve any shipments.
Patel said the government was taking steps to rein in
illegal sales, including setting up satellite tracking of
consignments and electronic checkposts.
The government has also proposed a mining bill that will
create an independent regulator, with the aim of improving
transparency. The bill imposes profit and royalty sharing
arrangements with villagers as well as encouraging foreign
"I expect the bill to be approved by parliament around
August when it convenes," Patel said.
(Editing by David Holmes)