India’s Odisha Mining Ban Forces Imports by Tata Steel and JSW

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India’s steel companies are starting to import the most crucial raw material required in steelmaking, iron ore, after one of its most resource-rich provinces, Odisha, had a mining ban imposed on it.

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Because of this, analysts forecast a sharp increase in India’s iron ore imports in 2014-15 if the situation does not improve in the coming days.

The Supreme Court of India had banned mining in India’s tourist State of Goa in September 2012. The ban was lifted, but was almost immediately followed by another ban on mining in the very important mining State of Odisha by the court.
Even before the Odisha ban, the closure of mines in Goa and another province, Karnataka, had resulted in less production of iron ore.

Major steelmakers are now left with few options except to continue importing ore. Besides the ban, a sharp drop in spot prices abroad coupled with a rising rupee are all seen as major incentives to start importing.

A report in India’s Business Standard said JSW Steel was importing high quality ore with 64 percent and above iron content grades to make up for the shortfall in supply and demand. The first shipment was expected to arrive in India by the end of the month.

The report quoted Director of Commercial Marketing, JSW Steel Jayant Acharya said the company was looking at import options from Australia, South Africa and Canada, as spot prices are US$90-95 a ton. JSW was currently operating at 85 percent of its capacity at all its plants, and it plans to fix this with imported ore.

Another report in The Economic Times  said Tata Steel, too, was importing more shipments of iron ore.

Quoting unnamed sources, the report said the steelmaker was beefing up its raw material stocks after May 16 when the Supreme Court ordered it to halt operations at its mines in Odisha. The iron-ore from Odisha partially provides for the company’s 10 million ton steel plant in Jamshedpur.

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