Indian Iron Ore Prices to Remain Under Pressure (Queen/Bowie Would Be Proud)

The Federation of Indian Mineral Industries has said India was likely to import 1 million tons of iron ore each month this fiscal year. Which is ironic, since not so long ago, India was the third-largest exporter of iron ore, a long-held position.

Adding a new dimension to the trade body’s assessment is another announcement by the Australian Bureau of Resources and Energy Economics that said India’s iron ore exports may fall between 2012-13 and 2017-18.

The reason: the mining ban in some big producing states that is expected to remain in place for some time, as measures are taken to check illegal mining of iron and manganese ores.

Neither story is good news for India’s mining and steel companies.

Especially because it was just in April this year that the Supreme Court of India (SC) had, after a gap of two years, allowed a resumption in mining in 90 mines in the ore-rich southern state of Karnataka. See this MetalMiner report on that development.

There is an apprehension within the Federation that the halting of production at the Karnataka mines could lead to around 60 sponge iron makers shutting down permanently.

It is no secret that India’s domestic output had declined and prices raised because of investigations into the hundreds of cases of illegal mining, and also because of an increase in export tax to 30 percent from 20 percent about 18 months ago.

Production at mines in the western state of Goa, and exports from mines in the eastern state of Orissa, too, have ground to a halt by similar court orders regarding illegal mining. Once upon a time, Goa was India’s largest exporter of iron ore.

According to a report in the Wall Street Journal, the consequent output decline had prompted Indian steelmakers lacking their own mines to increase imports.

To be continued in Part Two. 

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