New Delhi: Iron ore exporters in Karnataka may declare force majeure by the end of this week if a ban continues to stay, the head of a trade body said, a move that could hit supplies to the $88 billion world market.
Karnataka, the country’s second-largest iron ore producer, had banned exports of the steel making ingredient from 10 of its ports last week, citing a drive against illegal mining.
It also stopped issuing transport permits for carrying the export ore to other states.
Noor Ahmed, president of the Bellary-Hospet sector Iron Ore Mine Owners & Supplier’s Association, told Reuters on Tuesday the miners were on the verge of defaulting on export contracts.
“I think by the end of this week, there would be (some declarations of force majeure),” he said.
One London-based broker said two of his clients in Karnataka had declared force majeure on Sunday for cargoes of 45,000 tonnes and 40,000 tonnes meant for a China steel mill and a Chinese trader.
Ahmed said he was not aware of the development.
Force majeure, meaning ‘greater force’, is a clause included in commodity contracts to remove liability arising out of unforeseen circumstances that hinders trade.
An exporter in Bellary district of Karnataka, who has contracted to ship two cargoes of 50,000 tonnes each by the end of this month, said he was planning to declare force majeure by Thursday.
India had exported 110 million tonnes of iron ore in the year that ended last March, mostly to China that houses the world’s largest steel industry.
Karnataka had contributed about 27% of the exports.