The Indian government’s decision to ban the domestic sale and exports of iron ore fines by local steelmakers who own captive mines seems to be done with one eye at giving a fillip to the production of pellets from such fines, and thus getting cheaper raw material for the nation’s domestic steel industry.
Metal Miner reported in August that Indian mining majors were increasingly looking at pellet production from fines, a by-product that is either stored away or exported because steel majors refrain from using them in steel production. As many as 20 proposals for pellet plants were pending in one single state — Odisha.
The ban nearly coincided with a ban of another type.
Goa’s state government last week banned iron ore mining activity in that state following the establishment of a huge scam in operations. Goa is one of the top iron ore producers, and the ban could further reduce iron ore production in India.
Experts are interpreting the Indian government’s ban here as an attempt to force owners of captive iron ore mines to add value to the ore they own. The government order states that the entirety of ore fines produced in the mining operation of captive mines was to be used exclusively for consumption in steelmaking and cannot be sold in India or exported to other countries.
There is also a political angle to this stipulation, one that involves the federal-state structure. The order came after a provincial court had, in February, stopped Jharkhand state from banning exports, but allowing it later as a one-time domestic sale of 20 million tons of iron ore fines from the captive mines of Usha Martin and Steel Authority of India (SAIL).
The two are among six captive mining leases granted to steelmakers in Jharkhand. The move had taken on a political hue as some had accused the state government of giving in to pressure.
Captive mine owners have access to iron ore reportedly at a production cost of approximately US $11.22 per ton to $14.96 a ton, and the Indian government now hopes that with its fresh order, these companies would be propelled into setting up a beneficiation plant to pelletize fines.
What may be working at the back of the government’s mind is the fact that a court-imposed iron ore-mining ban had majorly affected mining activities in many states, and also has impacted India’s steel production. Those without captive mines were forced to import iron ore.
Even as this mining ban is being eased out, the process is slow. By the time the major mines come online, a lot of time will have already gone by.
India’s iron ore reserves are estimated at 7 billion tons, with production relegated to the states of Orissa, Karnataka, Chhattisgarh, Goa and Jharkhand. The Goa government ban order will further hit India’s production of iron ore in the current financial year.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.