KOLKATA (miningweekly.com) – A dichotomy in Indian iron-ore production/supply dynamics has emerged with the government claiming no shortage of the steelmaking raw material, while imports surge at the same time.

In a statement before Parliament, Mines Minister Pralhad Joshi said: “There is no shortage of iron-ore in the country to meet current demand/consumption.”

He noted that during 2018/19, Indian iron-ore production was recorded at 206.4-million tons, compared with 200.9-million tons in the previous financial year.

Joshi said that 24 new iron-ore blocks were being prepared by respective state governments, which would be put up for auction during the current year.

However, at the same time, government data showed that iron-ore imports into the country had surged 80% over the past three years at 12.8-million tons during 2018/19. This, alongside falling exports of iron-ore, which was down at 16.9-million tons at the close of last financial year - a fall of 49% over the past three years.

Analysts pointed out that it is still not clear whether rising imports could be attributed to a shortage of raw material availability, but local steel mills, particularly those located along the coastline, may be preferring to source imported feedstock to avoid infrastructure and logistical bottlenecks.

But this could only partially be the rationale for rising imports, particularly over the past several months, when the international price of high-grade iron-ore fines had surged to breach the $100/t mark and the benefits of a low landed price of the raw material for domestic steel mills had largely been eroded, the analysts said.

Surging imports have been one of the triggers for iron-ore producing states, such as Karnataka in southern India, demanding a hike in customs duty. The state government has petitioned the Mines Ministry to increase import duties on iron-ore from 2.5% at the forthcoming national Budget to be placed before Parliament on July 5.

Even with a Supreme Court-imposed production ceiling of 30-million tons a year for iron-ore mines in Karnataka, rising imports, low offtake of local raw material by domestic steel mills and a court-imposed ban on exports from the state, a large build-up of unsold stock, estimated by the industry at about 35-million tons, had resulted.

According to a miner based in the eastern coastal state of Odisha, the dichotomy in the domestic iron-ore industry could only be salvaged by the rapidly changing global trend in iron-ore supplies. He said that in the wake of disruption of supplies following tailings dam breaches at Vale iron-ore mines in Brazil and Rio Tinto’s forecasts of production cuts, domestic miners were expecting a shift in preference of Chinese steel mills from high-grade low alumina fines to high alumina content Indian iron-ore fines, which could help liquidate apparently excess production in the country resulting from low offtake of local raw materials by domestic steel mills.