SC ruling on Karnataka mines positive for JSW Steel: JP Morgan

MUMBAI: The Supreme Court has allowed 18 mining lease holders to mine iron ore in category 'A' mines in Karnataka. According to a JP Morgan report, the recommencement of iron ore mines will benefit JSW Steel.

"Iron ore production and hence availability is likely to increase over the next few months for the state's steel makers (including JSW) and also the sponge iron producers," the report said.

"The restart of production in category A mines will help improve utilization at JSW Steel's Vijayanagar plant, which is currently operating at 74 per cent level," it added.

However, brokerage is of the view that the ramp-up of production would be a key concern.

"The production from Category A mines and the NMDC production (currently at 7-8MTPA production runrate) should help ease the iron ore availability in Karnataka, but ramp up to full production remains a key concern," the note added.

The current production level at NMDC and Category A mines will provide 15-16 MTPA.

The Supreme Court had earlier indicated that it may allow mining in category A mines in Bellary, Chitradurga and Timkur districts, provided the companies met statutory compliance before resuming mining. It had asked companies to give an undertaking that the rehabilitation programme is under way.

Shares of JSW Steel closed at Rs 663.90, down 4.30 per cent, on the NSE. It touched a high of Rs 711.25 and a low of Rs 662.30 in trade today.