Photo by: Bloomberg
KOLKATA (miningweekly.com) - Indian steel producer JSW Steel Limited would import six-million tonnes of iron-ore during 2014/15 to tide over a domestic shortage of the raw material.
“It is an irony that India has to import iron-ore despite having large resources of it,” JSW Steel joint MD Seshagiri Rao said.
“Indian steel manufacturers are losing out on the most competitive advantage of domestic iron-ore resources and [have to] resort to imports, denting [the] competitiveness of local steelmaking,” he said.
The steel company imported its first iron-ore shipment of 170 000 t of high-grade iron-ore from South Africa last week and three more shipments of Capesize vessels were scheduled to arrive at Indian ports over the next few days.
These imports are necessary for the company to supplement the supplies of iron-ore in the domestic market owing to a substantial drop in domestic production, besides restrictions on the movement of iron-ore from one state to another, Rao said.
The recent closure of mines in the eastern Indian province of Odisha coupled with delays in getting mines in Karnataka and Goa back into operation had resulted in local steel mills facing acute shortages, he said.
“We have targeted to import half-a-million tonnes of high-grade iron-ore every month to maintain capacity utilisation of our plants at optimal level,” Rao said.
“Apart from supply-side issues, the divergent trends in prices, wherein domestic iron-ore prices were surging while international prices had fallen 30% over the last year, is a grave concern for domestic steel producers,” he said.
According to the steel company, capacity use of domestic steel mills had fallen to levels of around 77%, owing to shortages of iron-ore during 2013/14, from utilisation levels of 88% during 2010/11.
Indian iron-ore production had slumped over the years from 218-million tonnes in 2009/10 to only 144-million tons in 2013/14 and was forecast not to exceed 100-million tonnes in the current financial year against domestic demand of about 140-million tonnes.
A majority of mines in two key iron-ore-producing states, Karnataka and Goa, are yet to resume normal operations despite a partial lifting of court-ordered mining bans.
Rao said that at a time when iron-ore production was falling, export of iron-ore pellets was not only draining India's mineral wealth but also causing significant revenue loss and draining foreign currency reserves owing to the import of finished steel into the country. Besides, value addition in the case of pellets was merely 20% as against 500% in case of steel.