* Court allows auction of 11.46 mln T from inventory
* Sets up panel to decide on Goa iron ore output cap
* Move unlikely to affect global iron ore prices
By Krishna N Das
NEW DELHI, Nov 12 India's Supreme Court has
maintained a 14-month ban on iron ore mining in top producing
state Goa but allowed the sale of more than 11 million tonnes of
material that sat in stockpiles.
Restrictions aimed at clamping down on illegal mining have
slashed output and shipments from India, previously the world's
third-largest exporter with over $7 billion a year of iron ore
supplied mostly to China's steelmakers.
The world's top miners, Vale, Rio Tinto
and BHP Billiton , have stepped
into the vacuum left by India to boost sales to China, Japan and
The court ruled on Monday that 11.46 million tonnes of
inventory held by miners in Goa could be auctioned.
The ore is likely to be exported as it is low-grade material
unsuitable for most Indian steel mills, analysts said. The
volume is a fraction of the 1.1 billion tonne iron ore export
market so it is unlikely to have much impact on international
prices, analysts and traders said.
Sellers would have to offer steep discounts to move the ore,
given plentiful global supplies and thin appetite for lower
grades, they said.
"With the tougher environmental regulations this year in
China, that ore is getting a lot more difficult to use, so what
we're seeing is mills chasing better-quality material," said
Graeme Train, a commodity analyst at Macquarie in Shanghai.
"I think the Chinese are less interested in it than they
have been in the past. I think that the discount on this
low-grade material will be much wider than it was in 2012," he
Spot iron ore prices have fallen about 15
percent from this year's peak of near $160 a tonne as a slower
economy curbs Chinese demand, while Rio Tinto and BHP Billiton
continue to increase output.
The court also set up a panel to determine an output limit
for Goa. The panel is expected to submit an interim report by
Feb. 15, 2014.
"We are setting up a six-member expert committee to study
the cap on production based on carrying capacity of roads and
such," Justice A.K. Patnaik said.
While analysts expect a gradual recovery in Indian exports
over the next two years, the pace is likely to be modest and
leave it far from the record high of more than 117 million
tonnes set in the fiscal year through March 2010.
Macquarie's Train forecast Indian exports of 25 million
tonnes in 2014 and possibly up to 40 million the year after.
"We don't see it really going higher than that at this
stage, partly because of the restrictions on production.
Generally, we see a decline in the appetite for very low-grade
ores so I don't think we can see the same kind of volumes coming
out of Goa," he said.
Sesa Goa Ltd, India's top private-sector mining
company and a unit of London-listed Vedanta Resources Plc
, would be the biggest beneficiary if mining resumed in
Goa, as it is the largest producer in the state.