SINGAPORE – (Reuters) – An oversupplied global iron ore market may find some relief from an unlikely source as former No.3 exporter India turns into a big importer due to a cutback in domestic production.
The country may ship in up to 45 million tonnes over the next three years as home-grown iron ore output falls short of domestic steel production needs, an executive at an influential industry group said.
India imported just 0.37 million tonnes of the steelmaking raw material in 2013/14, government data showed. But already JSW Steel, India’s third-largest maker of the alloy, has said it will import 6 million tonnes of iron ore in 2014/15 against zero a year earlier.
“There’s no option but to import to meet the shortfall. We’re looking at between 10 and 15 million tonnes every fiscal year over the next three years,” Basant Poddar, vice president of the Federation of Indian Mineral Industries, the only industry group for mining firms in the country, told Reuters by phone.
“The mine closures all over India, starting from Karnataka, Goa, Odisha and Jharkhand, have created a massive disruption to supply,” Poddar said.
Mining in the key iron ore states of Karnataka and Goa was banned in 2011 and 2012, respectively, following a crackdown on illegal mining by the Supreme Court and the government.
Several mines in top producing Odisha state and in Jharkhand too were closed this year following government-imposed restrictions on the renewal of mining licenses.
While the bans have since been lifted, delays in restarting mining operations in Goa and Karnataka and the latest mine closures in the other states have limited local iron ore supply.
The disruptions have cut India’s iron ore production to 152 million tonnes in the year ended March 31, from about 218 million in 2009/10, according to the Indian Bureau of Mines.
The prospect of higher demand from India comes at an opportune time for global iron ore miners, whose margins have been shrunk by a 40 percent slump in iron ore prices this year.
Iron ore fell to $81.90 a tonne last week, its lowest since September 2009.
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