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Panic in steel sector as ore prices soar

Closure of seven mines will bring down iron ore production by about 20 mtpa

Published: 11th January 2018 04:39 AM  |   Last Updated: 11th January 2018 07:11 AM   |  A+A-

Express News Service

 BHUBANESWAR: Even as the State Government is confident of achieving iron ore production of more than 100 million tonnes in the current fiscal, in line with its target, the closure of seven major mines for failure to pay penalty for excess mining has pressed a panic button in the steel industry.

The shut down of the seven mines by State Government will bring down iron ore production by about 20 million tonne per annum (mtpa) at a time when the demand for ore is picking up in the domestic market.
“With Odisha accounting for half of iron ore production of the country, an annual shortfall of about 20 million tonnes of ore will have a telling impact on the steel industry. Uncertainty in the availability of ore after Supreme Court imposed heavy penalty on mining companies pushed the prices of different grades of iron ore,” sources in the steel industry said.

The price of iron ore fines, a major raw material for pellet, sponge and steel industry, has increased by more than 35 per cent in a span of 26 days, from November 30 to December 26, last year. The ex mines prices of fines Fe 62.5 per cent, most widely used grade in pellet and steel industry has increased from Rs 1,440 per tonne to Rs 1,950 per tonne since December 1, 2017 and is showing an increasing trend.

After paying a hefty penalty of about Rs 8,223 crore for excess mining, merchant miners of the State have jacked up the prices of iron ore lump of Fe 63 pc by 49 pc and of fines of the same percentage by 59 pc. While the prices of limps jumped from Rs 3,450 per tonne in October, 2017 to Rs 5,150 per tonne on January 2, the fines are now being sold at Rs 2,225 per tonne against Rs 1,400 per tonnes.

The National Mineral Development Corporation (NMDC), a Central PSU of the Steel Ministry, has also jacked up the price of lumps and fines by 35 per cent and 8 per cent respectively.

Secretary of Easter Zone Mining Association Prabodh Mohanty, however, said the current price rise in iron ore is due to increasing demand in the domestic market. The demand for steel has shown a remarkable growth due to huge investment by the Union Government in the infrastructure sector. The current price rise in iron ore has nothing to do with the closure of mines or penalty imposed by the Supreme Court, he added.

Stating that all the working mines are producing below their rated capacity, Mohanty said all the working mines have the capacity to produce about 180 million tonnes per annum. The miners will step up production if the demand grows up, he said.

“The closure of the seven mines will have no impact on the industry. There is no report from the industry so far about non-availability of ore,” said Director of Mines Dipak  Mohanty.

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