KOLKATA (miningweekly.com) - Indian iron-ore pellet manufacturers have sought government incentives to maximise the usage of low-grade iron-ore dumps to help mitigate the shortage of raw materials currently being experienced by steel producers.

“The government should immediately consider lowering royalties in the case of sales of low-grade iron-ore fines used specifically for pelletisation and beneficiation,” Pellet Manufacturers’ Association of India (PMAI) VP N D Rao said.

The royalty rate on iron-ore extraction was pegged at 10% and was payable to the province where mining operations were located.

“Reducing the royalty would ensure effective disposal of dumps, conserve key raw material and mitigate shortages faced by steel producers,” Rao added.

“The government should take speedy action on disposal of iron-ore dumps across the country in provinces like Goa, Karnataka and Odisha as much of the low-grade ore dumps get wasted during monsoon rains which is about to spread across the country,” he said.

The PMAI suggested that the government incentivise the use of low-grade iron-ore fines with an iron content of less than 45% as Indian steel producers mostly use high-grade lumps with an iron content of 63.5% and above and leave the rest as dumps at the mine pitheads.

PMAI estimated that there were about 150-million tonnes of low-grade iron-ore dumped as waste by miners across the country.

In a meeting last week with the Commerce Ministry, pellet manufacturers urged the government to scrap the 5% export duty on pellet shipments overseas, which had been imposed by the previous government, as it made exports uncompetitive and rendered large capacities surplus.

Pellet manufacturers claimed that capacity utilisation of the industry has slumped to below 50% following the imposition of the export duty, whereas global pellet producers were operating their plants at an average capacity utilisation rate of around 80%.

Total Indian pellet manufacturing capacity was estimated at around 61-million tonnes a year and projected to increase to 91-million tonnes a year, with several large companies, such as Tata Steel, JSW and Essar Steel, constructing pelletisation plants that would become operational within the next two years.