Fri Jul 29, 2011
* India's mining scandal throws iron ore industry out of gear
* State chief minister Yediyurappa to quit on Sunday
By Siddesh Mayenkar and Manolo Serapio Jr
MUMBAI/SINGAPORE, July 29 (Reuters) - Iron ore shipments from the southern Indian state of Karnataka could see further delays, buoying global prices, amid a mounting political crisis after the state's chief minister agreed to quit over a $3.6 billion illegal mining scandal.
Karnataka accounts for about a quarter of iron ore shipments from India, the world's No. 3 supplier of the steelmaking raw material after Australia and Brazil.
"The entire industry has been thrown out of gear. We'll have to wait and watch and be circumspect in whatever we do," Basant Poddar, vice-president of the Federation of Indian Mineral Industries, said, adding that the political uncertainty would further delay resumption of the state's iron ore exports.
Lower Indian exports have helped boost spot iron ore prices .IO62-CNI=SI which are trading at more than two-month highs,at above $170 per tonne, amid strong demand from top buyer China.
Karnataka banned iron ore shipments in July last year to curb illegal mining and has yet to issue export permits, despite an order from India's Supreme Court to lift the ban in April.
"It is still under government's consideration," said D.R.Veeranna from the directorate of mines and geology in Bangalore,which issues permits to export iron ore.
State officials have not given any export permits while another survey on illegal mining by the Supreme Court-appointed Central Empowered Committee is ongoing.
"We'll take this up after the dust settles. In a month's time we'll request the state government to issue permits," said Poddar, who estimates there are probably 10-15 million tonnes of unsold stocks of low-grade ore lying at Karnataka's mines.
A report produced after an independent enquiry into mining graft in Karnataka accused Chief Minister B.S. Yediyurappa and other key officials of causing at least 160 billion rupees ($3.6 billion) in lost state revenues between 2006 and 2010 from illegal mining and a litany of abuses.
K.P. Jagadish, a spokesman for Yediyurappa, said the chief minister would resign on July 31.
The Bharatiya Janata Party (BJP), India's main opposition group, has called a meeting of its central party members in Karnataka on Friday to pick a replacement for Yediyurappa, who has denied any wrongdoing.
The BJP sought the resignation of Yediyurappa after it came under attack from the ruling Congress party for what it called hypocrisy over graft charges.
INDIAN ORE SUPPLY TO UNDERPERFORM
The slow efforts in Karnataka to resume shipments along with increased costs are expected to cut India's iron ore exports to an eight-year low of 71.25 million tonnes in the current year to next March, according to a Reuters poll earlier this month.
The mining scandal will "no doubt" further delay resumption of shipments from Karnataka given the potential investigations ensuing from the allegations, said Graeme Train, commodity analyst at Macquarie in Shanghai.
"We see continued disruption to all of Indian supply not just Karnataka. Karnataka's captured most of the headlines but there are similar issues all over the place," said Train.
"Indian supply will underperform even relative to our expectations for this year. Indian exports are in pretty much structural decline as resource nationalism becomes a bigger driver behind policy."
Iron ore cargoes from India averaged about 800,000 tonnes a week in the last four weeks, less than half last year's pace which averaged nearly 8 million tonnes a month, said a Singapore-based trader.
"We're getting a limited amount of spot tenders from the big miners and the traditional big supplier in the spot market which is India is running at extremely low shipment pace mainly due to the monsoon and the Karnataka ban," the Singapore-based trader said.($1 = 44.08 rupees)
(sourced Thomson Reuters)
* India's mining scandal throws iron ore industry out of gear
* State chief minister Yediyurappa to quit on Sunday
By Siddesh Mayenkar and Manolo Serapio Jr
MUMBAI/SINGAPORE, July 29 (Reuters) - Iron ore shipments from the southern Indian state of Karnataka could see further delays, buoying global prices, amid a mounting political crisis after the state's chief minister agreed to quit over a $3.6 billion illegal mining scandal.
Karnataka accounts for about a quarter of iron ore shipments from India, the world's No. 3 supplier of the steelmaking raw material after Australia and Brazil.
"The entire industry has been thrown out of gear. We'll have to wait and watch and be circumspect in whatever we do," Basant Poddar, vice-president of the Federation of Indian Mineral Industries, said, adding that the political uncertainty would further delay resumption of the state's iron ore exports.
Lower Indian exports have helped boost spot iron ore prices .IO62-CNI=SI which are trading at more than two-month highs,at above $170 per tonne, amid strong demand from top buyer China.
Karnataka banned iron ore shipments in July last year to curb illegal mining and has yet to issue export permits, despite an order from India's Supreme Court to lift the ban in April.
"It is still under government's consideration," said D.R.Veeranna from the directorate of mines and geology in Bangalore,which issues permits to export iron ore.
State officials have not given any export permits while another survey on illegal mining by the Supreme Court-appointed Central Empowered Committee is ongoing.
"We'll take this up after the dust settles. In a month's time we'll request the state government to issue permits," said Poddar, who estimates there are probably 10-15 million tonnes of unsold stocks of low-grade ore lying at Karnataka's mines.
A report produced after an independent enquiry into mining graft in Karnataka accused Chief Minister B.S. Yediyurappa and other key officials of causing at least 160 billion rupees ($3.6 billion) in lost state revenues between 2006 and 2010 from illegal mining and a litany of abuses.
K.P. Jagadish, a spokesman for Yediyurappa, said the chief minister would resign on July 31.
The Bharatiya Janata Party (BJP), India's main opposition group, has called a meeting of its central party members in Karnataka on Friday to pick a replacement for Yediyurappa, who has denied any wrongdoing.
The BJP sought the resignation of Yediyurappa after it came under attack from the ruling Congress party for what it called hypocrisy over graft charges.
INDIAN ORE SUPPLY TO UNDERPERFORM
The slow efforts in Karnataka to resume shipments along with increased costs are expected to cut India's iron ore exports to an eight-year low of 71.25 million tonnes in the current year to next March, according to a Reuters poll earlier this month.
The mining scandal will "no doubt" further delay resumption of shipments from Karnataka given the potential investigations ensuing from the allegations, said Graeme Train, commodity analyst at Macquarie in Shanghai.
"We see continued disruption to all of Indian supply not just Karnataka. Karnataka's captured most of the headlines but there are similar issues all over the place," said Train.
"Indian supply will underperform even relative to our expectations for this year. Indian exports are in pretty much structural decline as resource nationalism becomes a bigger driver behind policy."
Iron ore cargoes from India averaged about 800,000 tonnes a week in the last four weeks, less than half last year's pace which averaged nearly 8 million tonnes a month, said a Singapore-based trader.
"We're getting a limited amount of spot tenders from the big miners and the traditional big supplier in the spot market which is India is running at extremely low shipment pace mainly due to the monsoon and the Karnataka ban," the Singapore-based trader said.($1 = 44.08 rupees)
(sourced Thomson Reuters)
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