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India is about to auction 25 million tonnes of illegally produced iron ore confiscated from private companies.
The auctions start tomorrow and follow a six week ban on mining in India’s second biggest iron ore producing state Karnataka.
The ore will be sold through electronic auctions at a rate of around 1.5 million tonnes per month, with the Government keeping ten per cent of the proceeds in royalties.
The halt to mining operations in the country has now started to have affect the global economy.
India is the third-largest producer of iron ore after Australia and Brazil, and there are concerns the trading ban is pushing up prices and limiting supplies to steelmakers.
JSW Steel said it was close to running out of iron ore supplies for some of its India plants.
The Indian mining industry is currently under close scrutiny, with government ministers accused of accepting bribes from companies accused of mining illegally.
The rise of commodity prices has seen a spike of shady deals in India’s mining industry and led to the creation of established illegal operations.
Companies are accused of mining and selling iron ore while ignoring environmental rules.
They are also accused of mining without the proper licences and approvals, thereby robbing the country of billions of dollars in taxes.
In April the Goa region’s Government said it would hang officials involved in illegal mining.