Getting India’s Steel Industry Back on Track

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Sohrab Darabshaw explained how the ban on iron ore mining in India’s Goa state came about and was, eventually, lifted. Ban Lifted Part 2 goes into more detail of how quickly India’s steel industry can see a rebound under the new terms of production in Goa.

MetalMiner has been keeping track of developments on the Goa mining ban since it was imposed. As late as March this year, we covered a government report by a Supreme Court-appointed committee of experts for assessing the macro-environmental impact if mining was to be allowed again. In fact, it was this committee that had also suggested mining be capped annually at 20 million tons, which is less than half of Goa’s peak iron ore output of 56 million tons per annum (MTPA).

Once the short-term elation dies down, miners will realize that resumption in mining in Goa will take at least six months, if not more. This is because the court had canceled all mining leases in the state, and ordered the local Goa government to formulate a policy and grant fresh licenses, according to a report in the Financial Express.

No doubt, the lifting of the mining ban in Goa and the earlier lifting of the ban in the neighboring State of Karnataka, will give a much-needed stimulus to India’s mining sector. For the last two years the mining sector has suffered and registered massive declines in output, sending panic waves not only among miners but also among India’s steel companies. The latter had started relying on imported ore to meet their raw material demands because of the domestic shortfall. That this led to the “we welcome the lifting of the ban” message by The Federation of Indian Mineral Industries is understandable.

India had earlier launched an ambitious program of producing 300 mtpa by 2025, which got derailed because of the mining ban. So much so that the Steel Ministry had put up a note to India’s Planning Commission saying that steel makers would increasingly have to fall back on imported ore. Iron ore production had fallen from 213 MTPA in 2008-09 to 136 MTPA in 2012-13. India’s current production capacity is down to around 90 MTPA. Approximately, 1.6 million tons of iron ore are required to manufacture one million tons of steel. Analysts are now hopeful that with the ban gone, and production kicking in, even six months later, India’s steel story will be back on track, once again.

Sohrab Darabshaw contributes an Indian perspective to MetalMiner from New Delhi.

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