JSW Steel to Start Using Low Grade Iron Ore to Stop Supply Crisis

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India’s iron ore shortage, though expected to ease in the coming months, may have found its first victim, or necessity breeds the mother of invention.

One of India’s leading private steel makers, JSW Steel may soon resort to using low-grade iron ore dumps containing 46 per cent iron content at one of its plants in south India to tide themselves over during the current iron ore supply crisis.

A report in the Business Standard said if this happens, it would represent the first time an Indian steel company uses such low-grade haematite iron ore as raw material. So far, JSW Steel has used iron ore with 52 per cent iron content, it added.

The company has set a production target of nine million ton (mt) for this financial year.

The Supreme Court of India had recently lifted the ban on iron ore mining in the Southern State of Karnataka, as reported by MetalMiner near JSW Steel’s Bellary plant. Analysts believed that the biggest beneficiary of this decision, JSW Steel could take advantage of this development. But with the re-supply of iron ore still some months away, due to the delay in deciding the price and date of the auction of iron ore by a court appointed monitoring committee, that development seems some way off from helping the current supply shortage.

According to the Deputy Managing Director of JSW Steel Vinod Nowal, the plant had some difficulties with this situation over the last two years. With a requirement of 15 million mt a year, securing such a large quantity of ore proved challenging. The company had little choice but to target 46% Fe grade iron ore.

Nowal added that JSW Steel’s in-house research and development team had moved to the advanced stages of using very low-grade iron ore, called banded haematite quartzite, or BHQ ore (with Fe content of less than 40 percent), in case iron ore did not become available.

JSW’s steel plant currently runs at 80 percent of installed capacity. It will await the announcement of e-auctions for iron ore dumps. Once that happens, the plant would procure the dumps, enrich the ore and use it.

Experts say JSW can expect low recovery from such low-grade iron ore. To make the proposition cost effective (add in logistics and the conversion of the ore to 61% FE), JSW would need to secure iron ore dumps extremely cost-effectively.

According to earlier reports, JSW Steel has received approximately 50 proposals from overseas sources for the purchase of iron ore and coking coal mines. For Indian companies unable to grow fast, due to domestic challenges related to land acquisition, environment and regulatory hurdles, overseas mines, especially in the US, Australia and Canada can offer the prospect of guaranteed supply of resources.

Despite the iron ore situation, JSW Steel Limited will likely complete the expansion at its plant in Karnataka. It will soon commission its second cold-rolled mill (CRM-2) to manufacture high-end products like automotive grade steel at the Bellary plant.

Comment (1)

  1. Raj says:

    The article is mainly propaganda. With NMDC producing 10 mill tons iron ore under the Supreme Court’s permission, and the A/B group mines that are restarted expected to produce at least 5 mill tons, JSW’s raw material is practically ensured, with the balance being procured from NMDC’s mines in other locations of India. Beneficiation of low grade ore especially of haematite Fe 40-50% is more a pilot plant experimental basis which may produce a miniscule quantity in comparison to JSW’s total iron ore consumption, although the articles released by JSW try to project it as the main product on which JSW is surviving. The dumps of ore in Karnataka are of Fe min. 50% but likely to be around Fe 53% as anything below these levels is uneconomical for export with 30% export duty and rail freight for export of 5 times domestic freight. In earlier times, even ore below Fe 62% was rejected and large quantities of such ore are lying in dumps in Karnataka.

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