- Demand stays muted, trading activity slows down
- Buyers wait for clarity on mineral rights tax
Domestic low-grade iron ore fines (Fe 57%) prices in Karnataka’s Bellary region saw minimal movements over the week. BigMint’s weekly index for low-grade fines (Fe 57%) remained unchanged w-o-w at INR 2,950/tonne (t) ($34/t) ex-mines Bellary (excluding taxes).
Similarly, the Fe 62% fines index also stood stable at INR 4,950/t ($57/t) ex-mines Bellary, inclusive of taxes. Additionally, some offers were seen at higher levels, that is INR 5,000-5,400/t ($58-62/t), due to the unavailability of high-grade material in the region.
Sources indicate that demand for the steelmaking raw material in the region remains muted. Despite stable prices, trade volumes were subdued, as buyers are reportedly waiting for clarity on changes to the tax policy before making significant purchases.
The Karnataka Mineral Rights and Mineral Bearing Land Tax Bill 2024 continued to be the most pressing issue within the domestic minerals industry. The potential implications of the bill have raised concerns about its severe impact on mineral taxes, prices, and the broader economic landscape.
Following its announcement, limited auctions have been seen and miners are holding back offers, awaiting clarity on the bill. Along the same lines, a buyer stated, “Bids have declined at NMDC’s auction in response to prevailing market sentiments. However, participation persisted due to material shortages and the absence of active offers from other miners during the previous week.”
A Bellary-based buyer told BigMint, “Discussions between miners and the government are ongoing. The government has inquired about alternative ways to generate the huge revenue if the mineral rights tax (MRT) is not implemented, with the Federation of Indian Mineral Industries (FIMI) actively exploring options. NMDC has maintained its existing auction procedures and terms, while KSMCL’s attempt to implement MRT has resulted in a subdued market response.”
Discussing the potential impact of the bill, a prominent miner from the region stated, “The MRT is currently just a bill. While it has been passed in the assembly, it is still awaiting the Governor’s approval to become an act.”
Rationale
- Zero (0) trades were recorded in this publishing window, receiving 0% weightage.
- Twelve (12) offers and indicative prices were recorded, out of which nine (9) were considered as T2 trades. Hence, this category was accorded 100% weightage.
Karnataka iron ore sales scenario (9-16 January 2025)
Outlook
The proposed MRT could heavily impact Karnataka’s mining and steel industries. While low-grade iron ore fines show short-term price stability, market participants are closely monitoring the evolving scenario.
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