Iron ore imports to rise as Karnataka mine shuts

India’s iron ore imports are likely to increase during the second half of the current fiscal owing to the suspension of operations by public sector mining giant NMDC at its Donimalai mines in Ballari district.

Last week, NMDC suspended mining at Donimalai after the Karnataka government imposed an 80% premium on sales. With this, an estimated seven million tonnes of iron ore production will come down. This gap is expected to result in higher imports during the next four months, steel industry sources told DH.

During the first six months of the current fiscal, iron ore imports surged 183% to 7.97 million metric tonnes as against 2.83 million metric tonnes in the first half of last fiscal. Out of the total imports of 7.97 million tonnes in H1, FY19, Australia’s share was highest at 65%, followed by South Africa, Brazil, Bahrain, and Oman. Current imports of 7.97 million tonnes in H1, FY19, has already crossed 90% of the total iron ore volumes imported in FY18 (8.7 million tonnes).

“Due to differences in ore grades in various iron ore producing states, prices differ and therefore, logistics cost for steel plants located on coastal India kept increasing. As a result, steel players started shifting to imports for sourcing the key raw material, rather than purchasing at higher domestic prices,” research agency ICRA Ratings said in a research note.

During the month of July this year, imports peaked at 1.9 million tonnes, while the lowest quantity was in June at 9.13 lakh tonnes. On an average, India imports one million tonnes per month.

“We have planned to import around four million tonnes in FY19 from Australia. The landed cost of the imported ore is equivalent to the cost of sourcing Ballari iron ore (about Rs 4,000 per tonne). That is why we are not worried. If Donimalai comes back into operation, there will be no need to import further,” Vinod Nowal, Deputy Managing Director, JSW Steel Limited said.

JSW Steel is the single largest importer of iron ore in the country. It requires an estimated 22 million tonnes of iron ore for its 12 million tonnes per annum (MTPA) steel plant at Toranagallu in Ballari district. It has planned to source 18 million tonnes through e-auctions in Karnataka, while the balance of 4 million tonnes will be met through imports, he said.

India’s highest imports till date were during 2014-15, when it imported 15 million tonnes, while the domestic production stood at 129.3 million tonnes.

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Iron ore imports to rise as Karnataka mine shuts

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