Karnataka: Iron ore prices remain flat w-o-w as miners hold back amid lack of clarity on new tax regime

• Market lacks clarity, miners withdraw offers
  
  
• Lack of iron ore availability supports prices
  
  

The Karnataka Mineral Rights & Mineral Bearing Land Tax Bill 2024 remains a critical issue for the domestic minerals industry, sparking concerns over its significant impact on mineral taxation, pricing, and the overall economic environment. In response, auctions have been limited, and miners are withholding offers as they await greater clarity on the bill's implications.

Prices for domestic low-grade iron ore fines (Fe 57%) in Karnataka's Bellary region have remained largely stable since last week. BigMint's weekly index for low-grade fines (Fe 57%) remains unchanged w-o-w at INR 3,050/tonne (t) ($36/t) ex-mines Bellary (excluding taxes).

Similarly, the Fe 62% fines index also remained stable w-o-w at INR 5,000/t ($58/t) ex-mines Bellary, inclusive of taxes. Some offers in the region were quoted at higher levels, around INR 5,300/t ($62/t), driven by the unavailability of high-grade material. However, no transactions were finalised at these rates, as buyers are yet to accept higher prices. A buyer said, "The market continues to face tight material availability, which is keeping prices supported; otherwise, they lack justification."

Industry sources indicate that demand for the steelmaking raw material in the region remains muted. Despite stable prices, trade volumes have been subdued. Buyers are reportedly waiting for clarity on tax policy before making significant purchases.

Another Bellary-based buyer told BigMint, "We are currently purchasing only in NMDC auctions, as it is the only miner conducting auctions following the MRT announcement. Other miners are not actively offering. Additionally, a major regional miner has indicated in its upcoming auction document that it will include MRT charges."

On the contrary, a miner from the region mentioned, "Even if the concerned miner intends to charge MRT in its upcoming auction, the government is unlikely to issue dispatch permits for the material, as the bill is still under negotiation."

Rationale

• Zero (0) trades were recorded in this publishing window, receiving 0% weightage.
  
  
• Twelve (12) offers and indicative prices were reported, out of which eight (8) were considered as T2 trades. Hence, this category was accorded 100% weightage.
  
  

Karnataka iron ore sales scenario (27 December 2024-2 January 2025)

Outlook

The proposed mineral rights tax has the potential to significantly impact Karnataka's mining and steel industries. While low-grade iron ore fines have shown short-term price stability, market participants remain vigilant as the situation develops further.