KOLKATA (miningweekly.com) – India is facing an imminent glut in iron-ore with production forecast at 180-million tonnes for the 2016/17 financial year and a current carryover stockpile of 140-million tonnes.
The increase in stockpiles came despite a 63% drop in imports during 2015/16, to 5.6-million tonnes, with miners forecasting a glut in the months ahead.
Final figures of current stocks were yet to be collated but data from the Federation of Indian Mineral Industries (FIMI) shows that stocks climbed to 140-million tonnes at the end of March, from around 128-million tonnes in the previous corresponding period, across the major producing provinces of Odisha, Jharkhand, Goa and Karnataka.
According to the FIMI, an estimated 85-million tonnes of the total stockpile were low-grade fines that were not finding any takers among domestic raw material consumers.
To make matters worse, the FIMI noted that dispatches from mines in Odisha were failing to take off since the local government charged the same rate of royalty for all grades of iron-ore, making it unviable for consumers to lift low-grade ores.
The existing stockpile and glut in the market was expected to worsen since the production cap at mines in Odisha – set by the Environmental Ministry – ran up to 80-million tonnes for 2016/17, but were still operating at 50% capacity.
The FIMI maintained that, with mines in Odisha still having headroom to ramp up production in the coming months, and with a slowdown in mine dispatches, the oversupply situation would get worse in the current year.
The FIMI had also flayed the Odisha government for continuing with its policy that half of the iron-ore production should be earmarked for steel mills located within the province, even though the aggregate average offtake by the latter did not exceed 20-million tonnes, causing local miners to get saddled with rising stock volumes.
In the medium term, Indian iron-ore production was forecast to hit the 200-million-tonne mark by 2020 for the first time since 2010/11.
The FIMI has cautioned that, with mine dispatches unlikely to show an uptick – considering the depressed steel price and the financial stress facing most domestic steel mills – the only option to prevent even more oversupply was to step up exports.
Meanwhile, despite falling iron-ore exports from the country, the government had steadfastly refused to scrap or reduce the 30% export tax on high-grade ore, though the same had been scrapped in the case of low-grade ore.
In the last financial year, Indian iron-ore exports touched an all-time low of 4.8-million tonnes, down from the heydays of 2010/11 when exports were recorded at 97-million tonnes.