July 29, 2011 / 3:37 PM / 9 years ago

Supreme Court bans mining in Bellary - sources

NEW DELHI (Reuters) - The Supreme Court has imposed an interim ban on mining in a key iron-ore rich region in Karnataka on concerns of environment degradation, legal sources said on Friday, a move which is likely to further delay exports and lift global prices.

A view of the Supreme Court building is seen in New Delhi December 7, 2010. The Supreme Court has imposed an interim ban on mining in a key iron-ore rich region in Karnataka on concerns of environment degradation, legal sources said on Friday, a move which is likely to further delay exports and lift global prices. REUTERS/B Mathur/Files

The district of Bellary produces about 35 million tonnes of iron ore annually, around 83 percent of Karnataka’s total annual production of 42 million tonnes.

Karnataka accounts for about a quarter of iron ore shipments from India, the world’s No. 3 supplier of the steelmaking raw material after Australia and Brazil.

The new order is seen impacting state-run NMDC, the world’s top miner, which annually mines around 6 million tonnes of iron ore from the region.

The court ordered the ban after a committee found de-forestation and environment degradation in the state’s Bellary-Hospet region, which produced more than 47 million tonnes of ore in 2007/08, the latest figures from the state mining department showed.

Karnataka, which is facing a mounting political crisis after the state’s chief minister agreed to quit over a $3.6 billion illegal mining scandal, has over 9,000 million tonnes of iron ore resources.

Besides, the state has yet to issue export permits, despite an April order from India’s top court to lift a July 2009 ban, while another survey on illegal mining by the Supreme Court-appointed Central Empowered Committee is ongoing.

Lower supplies from India could put further upward pressure on global iron ore prices as supplies are already tight and demand is firm from top consumer China.

The price for iron ore with 62 percent iron content rose 19 cents to $175.45 a tonne on Thursday, the highest since May 19, a price index by Metal Bulletin showed.

(Reporting by R. Venkat Raman and Siddesh Mayenkar; editing by Malini Menon)

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