The suspension of mining by state-run NMDC Limited at its Donimalai iron ore mine in Karnataka in southern India will increase prices in range of 10-15 percent, an official with Federation of Indian Mineral Industries (FIMI) said on Friday, November 23.
The disruption in supplies, even if temporary until dispute between NMDC and Karnataka government is resolved, will lead to shortage of raw material for steel mills located in southern India, he said.
At present iron ore in Karnataka is priced in the range of INR1,500/mt ($21/mt) to INR2,500/mt ($39/mt), excluding all taxes and levies, the official said.
It might be noted that the Karnataka government earlier this month renewed the lease for Donimalai in favor of NMDC Limited until November 2038 but added a stipulation that the lease holder pay 80 percent of average sales value to the government as lease rental.
NMDC produces an average of 6 million mt per year of iron ore from its Donimalai mines.