Indian mining ministry favors export of iron ore

June 28, 2008

June 28th (Steel Guru) – Indian Parliamentary Consultative Committee attached to the ministry of mines met recently to discuss all aspects of iron ore in India. The meeting was chaired by Mr Sis Ram Ola union minister of mines.

The members of the Consultative Committee were informed of the views of the ministry of mines that management of mineral resources has to be closely integrated with the overall strategy of development whereby exploitation of minerals is to be guided by long term national goals and perspectives. In view of the availability of ample resources of iron ore in India, the ministry is of the opinion that there is no reason for concern on raw material security for the domestic steel capacities likely to come up in future.

There has been a tremendous increase in the production of iron ore since 2003-04 and there has also been a surplus of iron ore in the country. The estimated surplus of iron ore in 2006-07 was 15.12 million tonnes.

 2003-4 2006-7
Production 122.84 180.91
Consumption 44.97 72.00
Exports 62.57 93.79

In million tonnes

The total production of iron ore fines in 2006-07 was 100 million tonnes against a total production of 181 million tonnes iron ore. The total export of fines in 2006-07 was 68.38 million tonnes against a total iron ore export. The consumption of fines by the domestic steel industry was only 41 million tonnes living a gap of 59 million tonnes.

Regarding the export of iron ore, the ministry of mines has opined that there does not appear to be justification for restricting export of Iron Ore from the perspective of availability or rate of depletion of reserves. According to the National Steel Policy 2005, annual export of iron ore is likely to grow to about 100 million tonnes by 2020. If this estimation holds good, the depletion of iron ore resources would only be between 0.8 billion tonnes and 1 billion tonnes out of the current resources of 25.25 billion tonnes.

The ministry of mines has pointed out that for a GDP growth rate of above 8%; the mining sector has to grow. After many decades of stagnation, international iron ore prices have been at a historically high level over the last two years or so. Thus, this is not the opportune time when India should be putting in any restrictions on export of the commodity.

The ministry is also of the opinion that a ban on the export of iron ore would have an adverse impact on domestic prices of the commodity and consequently on the development of iron ore mining as a whole. Export account for almost 50% production of iron ore. When market shrinks due to export restrictions and limited local demand, prices will fall to the point of marginal profitability leading to the closure of a number of mines.

The ministry also feels that it is national interest to promote pelletization, calibration, beneficiation and blending of exports on a large scale to compete with international export market.


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