Indian iron-ore production at 7-year high, but unsold low-grade stocks pile up



Source: CREAMER MEDIA MINING WEEKLY

Indian iron-ore production has touched a seven-year high of 210-million tons during 2017/18, but industry is facing a piquant situation of a mounting stockpile of unsold carryover low grade iron-ore lumps and fines.

Official state-wide production figures are yet to be compiled for last financial year, but mining industry representative bodies have estimated total iron-ore and fines production to be 210-million tons, outstripping the 200-million tons achieved in 2011, prior to the Supreme Court’s clampdown on illegal mining.

Industry officials said that with mines in Goa shut down once again on court orders early this year, the bulk of the incremental production was accounted for by the two mineral-rich states of Odisha and Karnataka.

Odisha, which generally accounted for 50% of the country’s iron-ore production, mined 105-million tons during 2017/18, up from 102-million tons during the previous financial year.

While data for Karnataka was not yet available, the officials said that following relaxations by the Supreme Court, several closed mines in the region were brought back into production, contributing to the seven-year high in total production of the steelmaking raw material.

However, on the flipside of higher production, unsold carryover stocks of low grade iron-ore fines from previous years was estimated to have piled up to the 150-million-ton mark at the end of 2017/18 at pitheads across the country, surpassing the 148-million tons of low grade iron-ore fines that were stockpiled at the end of the last financial year, according to industry estimates provided by three eastern India-based miners.

The bulk of the low grade fines, which range from 58% to 62% iron content, had piled up across pitheads of mines located in Jharkhand and Odisha as there were no international buyers for the last several months. Indian steel producers are not technically equipped to feed their blast furnaces with low grade fines.

At the same time, international buyers led by Chinese steel mills are either booking high grade lumps or concentrates with virtually no takers for low grade Indian fines. Close to 85% of the total stockpile of low grade piles were idling at pitheads at Odisha and Jharkhand.

Pointing out that traders representing Chinese steel mills were rejecting all offers for low grade fines, two Odisha-based miners said that the Federation of Indian Mineral Industries would make a fresh petition to the government seeking abolition of the 30% export tax on fines with an iron content ranging 58% to 62% and enable miners to liquidate stocks by sharply lowering offer levels. Currently, only fines with an iron content below 58% attract a nil rate of export duty.

The miners said that the lifting of restrictions on Odisha mines, which have the capacity to produce 30-million tons a year, would provide further momentum to production growth. However, without government intervention in export tariffs, the Indian iron-ore mining sector’s problem of plenty was expected to worsen, the miners added.

Source: CREAMER MEDIA MINING WEEKLY