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India's iron ore production to decrease as NMDC shuts down Karnataka mine

Nov 29,2018

It is reported that owing to the suspension of operations by public sector mining giant National Mineral Development Corporation (NMDC) at its Donimalai mines in Ballari district, India’s iron ore imports are likely to increase during the 2nd half of the current fiscal. Last week, the Karnataka government imposed an 80% premium on sales after which NMDC suspended mining at Donimalai. With this, an estimated 7 million tonnes of iron ore production will come down. This gap is expected to result in higher imports during the next 4 months.

 

During the first half 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 HI, FY18, Australia’s share was highest at 65%, followed by South Africa, Brazil, Bahrain, and Oman. Current imports of 7.97 million tonnes in HI, FY19, have already crossed 90% of the total iron ore volumes imported in FY18 (8.7 million tonnes).

 

Research agency Investment Information and Credit Rating Agency (ICRA) Ratings said that “Steel players started shifting to imports for sourcing the key raw material, rather than purchasing at higher domestic prices. 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.”

 

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.

 

Mr. Vinod Nowal, Deputy Managing Director, JSW Steel Limited said that “We have planned to import around 4 million tonnes in FY19 from Australia. The cost of sourcing Ballari iron ore is equivalent to the landed cost of the imported ore (about Rs 4,000 per tonne). If Donimalai comes back into operation, there will be no need to import further.”