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Bellary to Belekeri Port: A free ride!

The Supreme Court has decided to lift the ban on 18 Category A mines in Karnataka. However, it will take a year to complete with the clearance formalities, and also hope for revival of the steel market, internationally by then!
 
The Supreme Court’s decision to lift the ban on 18 “Category A” mines was well received in the industry as it would help revive the iron ore export from Karnataka.
 
However, the work, actually, cannot commence in these mines immediately but can do so only after implementing the land reclamation and rehabilitation plan, statutory clearances, environment, pollution control boards and other related approvals from various departments concerned. These will probably take several months to accomplish.
 
In the meantime, the Central Empowered Committee (CEC) approved by the Supreme Court has recommended that the Central Bureau of Investigation (CBI) be entrusted with the task of investigating all the illegalities that have occurred at the Belekeri port.
 
Further reports on the subject in the media indicates that as many as 5 lakh truck trips are estimated to have been involved in carting the iron ore illegally to the port, “right under the nose of every one”. As much as 50.79 lakh tonnes have been exported out of this port!
 
A great number of people have been involved at every stage of these trucks moving without any hindrance under the very eyes of law enforcing officials. There have been flagrant violations of all sorts of rules in this unauthorized and illegal transportation of iron ore for a full stretch of
400 km from Bellary to Belekeri without being stopped and checked for legal documents for carrying the ore. It will become clear when CBI completes its investigation and submits its reports.
 
Meantime, in due course, life will slowly return to normalcy in the affected areas of Bellary, Chittradurga and Tumkur districts in Karnataka. It will revive the employment opportunities to 75,000 to 100,000 people involved in the iron ore industry, both directly and indirectly.
 
In fact, as a sequel to the Supreme Courts' decision, some of the Category A miners have began their work on related compliance issues. They have been their activities relating to obtaining of clearances so that work can commence as soon permission is obtained after completing all the required formalities.
 
However, the world market situation for iron ore has taken a nose-dive in recent months.
Australia is the world's fourth largest producer, but has begun to curtail its mining operation due to falling prices, particularly after China has slowed down its imports. Iron ore is also
Australia's single largest export and the international price has touched the rock bottom price of $89 per dry metric tonne, which was prevailing in October 2009.
 
Indian supplies to China has also received a setback as exports from Karnataka mines stopped some 18 months ago and it will resume probably by middle of 2013 when exports may be able to make an attempt at recovery. In any case, at least for the Category A mines, it will take this much time to complete with the clearance formalities, and also hope for revival of the steel market, internationally, by then!

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)

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Headed higher: Weekly Market Report

Unless the Nifty breaks the previous day’s low, the trend is up for now

 
The market settled higher in the week, mainly supported by the gains on Friday following the European Central Bank’s (ECB) bond buying plan announced a day earlier. The disruption of the Monsoon Session of Parliament, which ended on Friday, kept the benchmarks in check till Thursday.
 
The BSE Sensex settled 254 points (1.46%) higher at 17,684 and the NSE Nifty closed the week at 5,342, up 84 points (1.59%). Unless the benchmark breaks the previous day’s low, we see the trend up for now.
 
The market settled lower on Monday amid volatile trade as a slew of economic indicators weakened investor sentiments. On Tuesday the benchmarks, which were in the negative for most part of the trading session, picked up momentum in post-noon trade and settled near the day’s high on select buying.  Selling in metals, capital goods and banking stocks pulled the indices lower on Wednesday.
 
On Thursday, the market closed in the green as the world awaited an announcement from the ECB which would help the debt-stricken states in the continent. The indices closed in the positive on Friday on optimism of the ECB.
 
In the sectoral space, BSE TECk and BSE IT gained 4% each while BSE Fast Moving Consumer Goods settled flat. There were no losers this week.
 
Maruti Suzuki (up 6%), Infosys (up 5%), Bajaj Auto, Tata Motors and Bharti Airtel (up 4% each) topped the Sensex list. On the other hand, BHEL, Tata Power (down 4% each), ITC (down 2%), Jindal Steel & Power and HDFC Bank (down 1% each) ended as the top losers on the benchmark.
 
The key gainers on the Nifty were HCL Technologies (up 6%), Maruti Suzuki, Infosys, Jaiprakash Associates and Hindustan Unilever (up 5% each). The major losers were IDFC (down 5%), BHEL (down 4%), Tata Power, Sesa Goa (down 3% each) and ITC (down 2%). 
 
The turmoil-ridden Monsoon Session of Parliament came to an end on Friday after most of its sittings were washed out over the controversial coal block allocation issue with the main opposition Bharatiya Janata Party remaining unrelenting on its demand for resignation of prime minister Manmohan Singh.
 
The HSBC India Manufacturing Purchasing Managers’ Index, a measure of factory production, eased to 52.8 in August, from 52.9 in July. This was the lowest growth rate recorded by the manufacturing sector in the past eight months mainly because of shrinking export orders and disruptions caused by power failures, the HSBC survey said.
 
On the other hand, the HSBC Services Purchasing Managers Index for August rose to 55 from 54.2 in July. The index has kept above the 50-mark below which it indicates contraction, since November 2011. August witnessed the fastest pace of growth in new business orders since February and there was also marked increase in optimism about the future, HSBC said.
 
India’s exports in July contracted 14.8%, the steepest fall in three years, to $22.4 billion, mainly due to the demand slowdown in the US and Europe. Imports too declined by 7.61% to $37.9 billion in July, leaving a trade deficit of $15.4 billion.
 
During the April-July period of the current fiscal, the country’s shipments have shrunk by 5.06% to $97.6 billion. Imports during the period dipped by 6.47% to $153.2 billion.
 
On the global front, US non-farm payrolls rose by 96,000 in August, below analysts’ expectations for an increase of 125,000. The unemployment rate declined to 8.1% from 8.3% in July. The dismal jobs report is likely to spur the Federal Reserve to look at additional steps when it meets on 12th-13th September.
 
Meanwhile, the ECB’s bond buying programme to curb the European debt crisis has removed the risk of a major economic hurdle in the region, analysts opined.
 

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