Karnataka seeks Indian government intervention amid rising unsold iron ore stocks

Monday, 26 November 2018 15:10:38 (GMT+3)   |   Kolkata
       

The government of the southwestern Indian state of Karnataka has sought intervention by India’s federal government to rectify the situation of steel mills located in the regions resorting to imports of iron ore while large stocks remain unsold at e-auctions of the raw material conducted by the state government, a government official said on Monday, November 26.

The Karnataka government official said that Karnataka chief minister H D Kumaraswamy in a communication to the Indian prime minister pointed out that Karnataka, the third large producer of iron ore in the country, is facing a glut of large unsold stocks while steel mills in the region are resorting to large-volume imports taking advantage of the low 2.5 percent import duty.

The chief minister pointed out that the iron ore mining sector in the state has been skewed by several restrictions. For example, on the production side, the Indian Supreme Court imposed an aggregate production ceiling of 30 million mt per year for all mines in the state, but sale is restricted to e-auctions conducted by the state government and free commercial sale by miners at negotiated prices is prohibited.

Sale only through competitive bidding at e-auctions has resulted in large unsold stocks lying at pitheads while steel companies are concluding deals for imports at lower prices, the official added.

The state government fears that, with miners being prohibited from exporting iron ore or iron ore pellets from the state as per court orders, some mines will be forced to close operations if the rise in stocks continues unabated, the official added.


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