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Acute shortage of iron ore fines in India - CARE Research
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Friday, 21 Mar 2014

With the curb on illegal mining in two major iron ore producing states, India witnessed a significant decline in its iron ore production from the peak of about 218 million tonnes per annum in FY 2010 to about 135 million tonne per annum in FY 2013. In line with the fall in iron ore production and with no new development of mines, availability of lumps in the domestic market also declined.

Exports also plummeted to a decadal low of about 18 million tonne per annum in FY 2013, as compared to the peak of about 117 million tonne per annum achieved in FY10. Despite having ample resources, the scarcity situation has led to a vibrant debate on the government’s policy regarding iron ore exports and the distribution and allotment of existing and new mining assets. Both, the steel makers and the private miners hold a completely contrarian view regarding iron ore exports.

CARE Research said in a research note that overall, there is a shortage of iron ore and mining industry can do a lot better both with domestic steel manufacturers and export opportunities.

Gauging the need for utilising fines, steelmakers in the last 3 to 4 years have taken corrective steps to make themselves capable of using the low grade iron ore fines. These players are in the process of significantly increasing their sintering and pelletisation capacity.

According to CARE Research, sintering and pelletisation not only helps steelmakers in utilising the inferior grade fines, but also helps them in improving the quality of steel as well. Further pelletisation also helps steelmakers in transferring low grade iron ore fines in a much cleaner and efficient manner.

Going ahead CARE Research expects significant pellets and sintering capacity addition. Sintering and pelletisation capacity is likely to increase from about 60 million tonne per annum and 54 million tonne per annum as recorded in FY13 to about 80 million tonne per annum and 92 million tonne per annum respectively during the next 3 to 4 years.

CARE Research believed these beneficiation plants are already facing acute shortage of iron ore fines for optimum utilisation of their existing capacity. Going ahead, with further increase in steel making capacity, the demand supply gap for iron ore is only likely to widen, which additionally supports the argument to curtail iron ore exports.

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