KOLKATA (miningweekly.com) - India’s iron-ore import dependency would see a quantum jump if the country’s steel production target of 300-million tonnes a year was achieved by 2025, an assessment report prepared by the Steel Ministry said.

With several brownfield steel projects planned and under implementation and greenfield plants in the pipeline, the targeted production of 300-million tonnes a year would require iron-ore production of around 480-million tonnes a year against a current production level of 136-million tonnes in 2012/13, which was down from 213-million tonnes of ore produced in 2008/09, the report said.

Reviewing the growth in domestic steel production, the Ministry has identified the availability of iron-ore as the single biggest challenge in achieving finished steel production targets.

The capacity addition by domestic steel producers between 2008/09 and 2012/13, which saw demand for iron-ore increase from 87-million tonnes a year to 125-million tonnes a year, indicated that domestic production from mines would not be able to support the projected growth in steel production, necessitating increasing import dependency for the raw material, the report said.

The report has been placed before the Planning Commission, the apex economic advisory body, for a strategic policy initiative to address the issue.

The Ministry said that with domestic iron-ore production falling below the 200-million-tonne-a-year mark, it would not be able to ramp up production in the short term, meaning a case could be made for continuing the 30% export tax as a disincentive to shipping the raw material overseas.

According to estimates made by the domestic steel industry, iron-ore imports during the current fiscal would be around 5-million tonnes, up from 3.5-million tonnes in 2012/13, mainly by steel plants located along the coastline or in proximity to ports.

Steel sector analysts said that capacity utilization of domestic steel mills was about 81% of installed capacity, producing 78.3-million tonnes of steel in 2012/13. The suboptimal realisation of profits on the back of investments made was primarily owing to a shortage of raw material.

During January to October 2013, Indian iron-ore production has been pegged at 66-million tonnes.