KOLKATA (miningweekly.com) – India is poised to become a net importer of iron-ore during the next financial year, as the domestic market shifts from surplus to deficit.

Supply-side disruptions could lead to an estimated deficit of about 50-million tons during 2020/21, forcing imports of between 25-million and 30-million tons a year.

According to the Federation of Indian Mineral Industries (FIMI), state governments of iron-ore-bearing states were scheduled to put up for auction 48 iron-ore blocks where mining leases were expiring on March 31, 2020. However, with delays in holding the auction process looming large, the domestic iron-ore market was critically poised to enter a deficit market over the next few months.

“We are facing a bleak situation.  If we cannot produce, we will have to import,” FIMI secretary general R K Sharma said.

“This year, everybody is trying to extract as much as they can. But we don’t know what will happen after March 31, 2020,” he said.

Since the Mines and Mineral (Regulation and Development) Act (MMDRA) was promulgated in 2015, auctions had been made mandatory for the allocation of all mineral assets. However, the Indian mining industry has put the blame squarely on mandatory auctions, maintaining that it is the best practice and that ‘first-come, first-served’ is a more efficient process for allocation of such assets.

“The auction has been a total failure and even after three to four years many of the projects so awarded are far from production,” Sharma said.

India was last a net importer of iron-ore in 2015, when the MMDRA was put into force. The country imported 10.6-million tons during 2015/16 and exported 4.3-million tons during the financial year. During 2018/19, the country exported 18.3-million tons, while imports were recorded at 15.89-million tons.

As a palliative to the imminent shortage of iron-ore, the Mines Ministry last month permitted State-run steel producer, Steel Authority of India Limited (SAIL), free merchant sale of iron-ore from its captive mines.

According to an official, to ensure raw material availability of domestic steel mills, SAIL would be allowed free merchant sale of iron-ore up to 25% of its production from its 20 captive iron-ore mines, for the next two years.

SAIL operates 20 iron-ore mines across Odisha, Jharkhand, Chhattisgarh and West Bengal, producing an average 28-million tons a year of iron-ore.