MetalMiner welcomes guest contributor Rahul Jalan, a Chennai-based senior research analyst in metals for Beroe, Inc. who tracks the global steel and rare earths supply chain and analyzes global procurement developments to help develop procurement solutions for the company. Beroe specializes in providing procurement intelligence for a broad swath of industries, enabling buyers’ decision-making.
Continued from Part One.
As an overview of the legislative and regulatory activity surrounding illegal iron ore mining in India’s Karnataka state, you’ll find a timeline of events below:
July 26: The Karnataka government bans iron ore exports from 10 ports in the state.
July 28: The Karnataka government bans iron ore exports by all KarnatakaÂbased mines.
April 5: India’s Supreme Court lifts the iron ore export ban and gives 15 days to put the required infrastructure in place and enforce rules for preventing illegal iron ore exports.
April 29: The Supreme Court orders the closure of 19 mines in Karnataka due to the evidence of illegal mining.
May 6: The Supreme Court appoints a committee to survey and inspect an additional 99 mines within the region for mining irregularities.
July 29: The Supreme Court bans iron ore mining in Karnataka’s Bellary district (Bellary-Hospet region).
Aug. 5: The Supreme Court partially lifts the iron ore mining ban in Bellary, allowing stateÂrun NMDC to mine up to 1 million tons a month from Aug. 6, 2011.
Aug. 26: The Supreme Court bans iron ore mining in Karnataka’s Tumkur and Chitradurga districts.
Sept. 2: The Supreme Court permits the auction of 25 million tons of the available iron ore inventory in Karnataka.
Sept. 9: The Supreme Court permits eÂauction of 1.5 million tons of iron ore per month based on steel manufacturers’ demand
Sept. 14: About 400,00 tons of iron ore are sold in the first eÂauction.
Sept. 23: The Supreme Court directs NMDC’s Karnataka mine to sell iron ore through eÂauction.
NMDC Allowed Mining in Bellary — With Limitations
On Aug. 5, 2011, India’s Supreme Court allowed state-owned NMDC Ltd. to mine as much as 1 million tons of iron ore per month in Karnataka’s Bellary district to meet domestic steelmakers’ needs, while clarifying that no part of the production should be exported. Further, the Court also directed Karnataka’s government to charge a higher royalty rate (10 percent) on the current market value of iron ore, which is much higher than the fixed rate of 10 percent of pithead; and to submit the rehabilitation and reclamation plan for the Bellary district within the next three months. The government also asked NMDC to maintain a separate account for the royalty paid.
Check back for Part 3, which will delve deeper into the economic impacts of ore shortages and export restrictions.