Steel makers double pellets imports in May

MUMBAI (Reuters) - Imports into India of iron ore pellets, used in making steel, more than doubled in May to 174,319 tonnes as a partial mining ban in Karnataka hit supplies, an industry body said.

Production in India, once the third-biggest global supplier of iron ore, has been hit as the government and state authorities raise taxes and freight rates to try to curb exports and retain supplies for domestic use.

Output slumped 18 percent to 169.66 million tonnes in the fiscal year to March 31, 2012, pushing many steel makers to operate below capacity and helping to cut exports 42 percent to 57 million tonnes.

"The current scenario of iron ore in India is quite shocking," said R.K. Sharma, secretary general of Federation of Indian Mineral Industries (FIMI).

"A commodity which has contributed significantly to the foreign exchange earnings is now sucking out foreign exchange from the country," said Sharma.

The country has lost $8.3 billion in foreign exchange due to lower exports of iron ore fines, the FIMI estimates.

Karnataka used to account for 25 percent of India's total output.

Earlier in the month, a Supreme Court-appointed committee approved resumption of operations of eight mines in Karnataka, with a total capacity of 5.5 million tonnes, in addition to NMDC's a million tonne per month. [ID:nL3E8I435W] (Reporting by Siddesh Mayenkar; Editing by Anupama Dwivedi)

Source: Reuters