Apr 18, 2013, 11.02 PM | Source: CNBC-TV18
The Supreme Court (SC) on Thursday lifted a one-and-a-half-year old iron ore mining ban in Karnataka, spiking the shares of mining companies between 2-15 percent.
The Supreme Court (SC) on Thursday lifted a one-and-a-half-year old iron ore mining ban in Karnataka, lifting the shares of mining companies between 2-15 percent.
Following the SC verdict, shares of companies like Kalyani Steel rose 15 percent to Rs 42.10, JSW Steel also climbed over two percent to Rs 717.30. Sesa Goa shares, which has most of its mining operations in Goa and little capacity in Karnataka also rose marginally.
The SC had in 2011 banned iron ore mining in Bellary, Chitradurga and Tumkur districts of Karnataka citing environmental violations, and had asked Central Empowered Committee (CEC) to carry out an environmental impact assessment.
Karnataka alone accounts for around a fifth of the total 200 million tonne of iron ore produced in the country annually. Also, over ten steel companies including JSW Steel, Mukand, Sunflag Steel and Kalyani Steels churn out over 12mt steel using iron ore.
None of these have captive mines linked to their projects and had to procure their raw material from merchant miners at a higher rate.
In a temporary arrangement, aimed at helping the steel industry survive in the interim, the SC had allowed daily auctions of iron ore from existing stocks, apart from directing state-owned NMDC Ltd to operate two of its mines to supply a total of a million tonne every month.
Meanwhile, the forest bench of the SC has accepted all the reports submitted periodically by the CEC regarding the mining in Karnataka.
As per the CEC reports, Category B mines will be allowed to restart mining subject to necessary statutory clearances and completion of relief and rehabilitation work is complete. Already, the apex court has in 2012 approved 18 Category A mines, of which 7 mines have started mining.
The leases of Category C mines will stand cancelled as per the CEC report. There are 49 mining leases in Category C, whose licences will stand cancelled.
Meanwhile, after resuming operation in Karnataka, JSW Steel will be able to up enhance capacity to over 80 percent level The company owns a 10 million tonne per annum (mtpa) steel plant at its flagship factory at Vijayanagar which had been running at abysmally low capacities when mining of iron ore was banned in Karnataka in July 2011.
Due to the ongoing ban in Karnataka and in Goa, Sesa Goa also could not produce iron-ore in December quarter. The Vedanta group company also had to defer around 10-25 percent of senior staff salaries in January this year as it found it difficult to maintain topline growth on the back of mining ban.
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