Mumbai: Shares of India’s JSW Steel plunged to their 52-week low on Monday due to concerns over the impact of the Supreme Court’s ban on iron ore mining in Bellary district of Karnataka state and Citigroup’s downgrade to “sell” with price target cut by more than half.
The shares, which the market currently values $3.9 billion, have plunged more than 20% in last three trading sessions. At 11:00am, the stock was down 10.98% at 688.05 rupees in a Mumbai market that was up 0.72%.
Citigroup, citing the blanket ban on iron ore mining in Bellary imposed by the country’s top Court, reduced its target price to Rs 612 from Rs 1,254.
“The order to ban mining in Bellary means that JSW Steel cannot get ore from its own mines or from NMDC (-owned mines in the district),” Citi said in its report.
“Also based on the ongoing review, the ban could be extended to other parts,” it added.
Bellary is a key iron-ore rich region in southern Karnataka state and the Supreme Court has imposed an interim ban on mining there on concerns of environment degradation, sources told Reuters on Friday.
The district produces about 35 million tonne of iron ore annually, around 83% of Karnataka’s total annual production of 42 million tonne.
The ban is likely to impact costs and volumes for most of the company’s ore, the brokerage report noted.
JSW Steel declined to immediately comment on the ban.
However, it had said on Friday that all transactions related to purchase of iron-ore in Karnataka are “legally compliant” after it found itself at the centre of another controversy of alleged illegal purchase of iron ore being mentioned in the report by the state’s anti-graft watchdog, Lokayukta.