Iron ore production to rise 5% this fiscal year

The country’s iron ore production is projected to grow by five per cent in 2018-19, helped by stable demand from the infrastructure and automobile industries.

Apart from the anticipated growth in output, demand will be met by the accumulated stock at mine heads, chiefly in Odisha and Jharkhand. These two account for 80 per cent of the total inventory.

In 2017-18, the country produced 210 million tonnes (mt), a rise of nine per cent from a year before. That crossing of the 200 mt mark was after seven years. Production had peaked at 218 mt in 2009-10 and later slumped, to 136 mt in 2012-13 as the key producing states of Karnataka and Goa were subject to courtordered mining bans.

As for this year, “the Supreme Court has hiked the annual production cap in Karnataka from 30 to 35 mt. NMDC, the largest miner, has also vowed to scale up output”, says a metal sector analyst.

Adding: “Domestic demand for iron ore looks positive. That apart, the export markets have shown promise, too, with China sourcing more of iron ore pellets from India.”

A report from CARE Ratings shows how iron ore pellets are outpacing high-grade fines in international markets, especially China. “Chinese steel mills prefer pellets over fines as they are under pressure to cut polluting emissions; they are seen to be cutting down volume bookings for high-grade Indian ore fines with high alumina content. While export of fines attracts a tax of 30 per cent, iron ore pellet export attracts nil or minimal tax and is acting as a contributing element for traders and manufacturers to push higher volumes overseas,” the report stated. China is the principal buyer of Indian iron ore pellets. Of the 9.31 mt of pellet export in FY18, China’s share was 81 per cent. Pellet export is expected to touch 10 mt this year. Total iron ore export by volumes was 24.2 mt in FY18, a fall of nearly 20 per cent over the FY17 figure of 30.7 mt.

About 90 per cent of the iron ore mined in the country goes for domestic use. The residual ore is shipped to China, Japan, South Korea, Oman, Vietnam, Indonesia and Malaysia. Export in the first quarter of this financial year, shows data from the Centre for Monitoring Indian Economy was almost five mt.