The court also cancelled mining leases for all illegal mines in the state, Judge Aftab Alam said on Thursday.
The ruling is the latest step back from a total ban on mining in the state that was put in force in 2011, because of environmental concerns.
In September, the Supreme Court allowed 18 mines in Karnataka to resume operations, while state-run miner NMDC was cleared to produce one million tonnes a month in August 2011.
India used to produce about 200 million tonnes a year of iron ore and exported about half of that, mostly to top buyer China. But a clampdown on illegal mining, and exports from Karnataka, slashed both output and shipments.