BS reported that Hospet headquartered iron ore mining company MSPL Limited has entered into trading of iron ore to honor its supply obligation as the company is facing a tough time in generating requisite volume on the back of recent iron ore mining controversy in the state.

A top company official said that "We have entered into trading of iron ore to meet the supply obligation to exporters and manufacturers. There has been no default by the company in honoring the contracts."

The official said that "We don't want to loose our present client base and will honor all the past contracts through trading. Profit margin of iron ore has been in the range of USD 2 to USD 3 per tonne due to trading which was substantially lower in comparison to iron ore prices supplied from our own mines."

He added that the company has a trading house in Goa that procures iron ore from local miners and supply it for exports.

MSPL, which exports 98% of its iron ore to China, had exported around 3.5 million tonne of iron ore in 2007-08 and 2.8 million tonne in 2008-09, a drop of 25% YoY.

However, the recent controversy relating to alleged illegal iron ore mining and exports has put the company in a fix as it is unable to generate enough volume of iron ore. MSPL is licensed to extract close to 5 million tonnes per annum.

MSPL along with many iron ore mining companies have been badly hit due to recent mining controversy in Bellary Hospet Sandur area, which has the highest deposit of high grade iron ore in the state.

(Sourced from www.business-standard.com)