India's Supreme Court extended a ban on mining to two more districts of a key iron ore producing state on Friday, a state lawyer said, a move likely to hamper output from Karnataka, the country's second-biggest iron ore exporting region. Shares in three top iron ore miners fell in a weak Mumbai market that closed 1.8 percent lower on profit booking. While Sesa Goa fell 6.4 percent, NMDC lost more than 4 percent and JSW Steel lost 5.8 percent.
"(A court-appointed panel) had asked for the ban extension to Tumkur and Chitradurga (districts), and the Supreme Court has done the same," said Anita Shenoy, counsel for the Karnataka government, told Reuters, confirming an earlier report on two TV channels. Officials at JSW Steel declined to comment, saying they haven't received the court's order. Sesa Goa Managing Director was not immediately available for comment.
The Tumkur and Chitradurga districts of Karnataka account for about seven percent of India's estimated 213 million tonnes of annual iron ore output, and the ban could hit exports from the world's third-largest supplier of the steel-making material. "It's a terrible blow to the industry, not only mining industry will get affected, the revenues to the government will get affected, the steel industry will also get affected," said David Pichamuthu, head of the Federation of Indian Minerals and Industry's (FIMI) southern region.
Most of the produce from the two districts goes to domestic steel-makers. Private miners are also banned from operating in another Karnataka district, Bellary, which produces some 30 million tonnes of iron ore every year. JSW Steel sources 50 percent of its requirement from these three districts.
Prohibition on mining in the three districts was recommended by a court-appointed panel on August 19, as part of efforts to control illegal mining. The state had introduced a ban on exports in July 2010 which it said aimed to curb illegal mining. The Supreme Court's move is in line with the federal government's stand that Karnataka should not have imposed a blanket ban on iron ore exports and should, rather, focus on controlling illegal mining in specific districts.