The restrictions placed on iron ore mining by the judiciary has resulting in a shortage of the commodity in India and is leading to large-scale import of the product from overseas, JSW Steel has said.
The company said it has decided to import around 6 million tonnes of iron ore in the current fiscal from overseas market.
“This is an irony that India has to import iron ore inspite of having large iron ore resources. Indian steel manufacturers are losing out the most comparative advantage of availability of local iron ore and are constrained to resort to imports denting the competitiveness of steel manufacturing in India,” it said.
It received its first iron ore shipment in capesize vessel with 1,70,000 tonnes of high grade iron ore in the last week from South Africa at Krishnapatnam Port. “Three more shipments of iron ore in capesize vessels are planned to reach Indian ports in next few days,” it said.
Iron ore mining was severely curtailed after large-scale irregularities were found in the unearthing of the commodity. Iron ore mining is considered to be among the most corrupt segments in an already not-so-above-board mining sector in India.
“The recent closure of mines in Odisha, delay in opening up of mines in Karnataka and Goa had resulted in acute shortage of iron ore in the country. We have decided to import half a million tonne of high-grade ore every month to maintain the capacity utilisation at optimum level. The surging iron ore prices due to shortages in India is matter of grave concern when international iron ore prices dropped by more than 30% in the last 12 months,” JSW Steel added.
According to the company, there has been sharp decline to 77% in capacity utilization in Indian steel industry due to shortage of iron ore in FY 2013-14 from 88% in 2010-11.
India produced about 218 million tonnes (MT) of iron ore in 2009-10, but only 144 MT in 2013-14. This is further expected to drop to 100 MT in FY 2014-15 against the demand of 140 MT, the company said.
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.