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Moneylife » Companies & Sectors » Sector Trends » Acute shortage of iron ore fines

Acute shortage of iron ore fines

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Moneylife Digital Team | 19/03/2014 06:33 PM | 

With more steel capacity coming on stream, the iron ore shortage will only increase. CARE Ratings suggest a control on iron ore exports

With the curb on illegal mining in two major iron ore producing states (Karnataka and Goa accounting for more than 35% share of the domestic production), India witnessed a significant decline in its iron ore production from the peak of about 218 million tonnes per annum (mtpa) in FY10 to about 135 mtpa in FY13. In line with the fall in iron ore production and with no new development of mines, availability of lumps in the domestic market also declined. Exports also plummeted to a decadal low of about 18 mtpa in FY13, as compared to the peak of about 117 mtpa achieved in FY10. Despite having ample resources, the scarcity situation has led to a vibrant debate on the government’s policy regarding iron ore exports and the distribution and allotment of existing and new mining assets. Both, the steel makers (for banning exports) and the private miners (against exports ban) hold a completely contrarian view regarding iron ore exports.


Overall, there is a shortage of iron ore and mining industry can do a lot better both with domestic steel manufacturers and export opportunities, points out CARE Research in a research note.


Gauging the need for utilising fines, steelmakers in the last 3-4 years have taken corrective steps to make themselves capable of using the low grade iron ore fines. These players are in the process of significantly increasing their sintering and pelletisation capacity, observes the research note.


According to CARE Research, sintering and pelletisation not only helps steelmakers in utilising the inferior grade fines, but also helps them in improving the quality of steel as well. Further pelletisation also helps steelmakers in transferring low grade iron ore fines in a much cleaner and efficient manner. Going ahead CARE Research expects significant pellets and sintering capacity addition. Sintering and pelletisation capacity is likely to increase from about 60 and 54 mtpa as recorded in FY13 to about 80 and 92 mtpa respectively during the next 3-4 years.


CARE Research believes these beneficiation plants are already facing acute shortage of iron ore fines for optimum utilisation of their existing capacity. Going ahead, with further increase in steel making capacity, the demand–supply gap for iron ore is only likely to widen, which additionally supports the argument to curtail iron ore exports.

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