With iron ore exports in the western Indian coastal province of Goa unlikely to resume before the onset of the monsoon rains and several Indian steel mills firming up iron ore imports, the country’s net import dependency on iron ore was expected to increase during the current fiscal period.
According to the Federation of Indian Mineral Industries (FIMI), a representative body of domestic miners, Indian iron ore import dependency was expected to increase in 2015–2016 considering that the difference between total imports and total exports would be much larger than the previous year.
“Because of various regulatory issues, supplies of iron ore from mineral rich provinces like Orissa, Karnataka and Goa would continue to be restricted and future of export remain bleak,” said R K Sharma, secretary general of FIMI.
Iron ore mines in Goa, which were expected to come back to production in phases, after a court-imposed ban on mining was lifted last year, were unlikely to commence production before the onset of monsoon rains starting in June, and hence more steel mills were firming up their import plans. The earliest Goa mines could be expected to get back into production was after the monsoon rains in September-October.
Indian iron ore imports during the 12-month period ending March 31 have been estimated at 15 million metric tons (mt) and exports at 7 million mt. In the current fiscal period, total imports were expected to cross the 20-million-mt mark with exports either falling or at best remain stagnant, FIMI said.
While steps to comply with regulatory issues—including adhering to new environmental guidelines set by the Supreme Court—were yet to be completed to enable Goa mines to get back into production, local miners were not in a hurry to commence mining in view of falling international prices.
According to a miner in Goa, current export offers for high grade iron ore fines (Fe content 63.5% and above) at $55–$56 per mt CFR China would have to increase by at least $15–$20 per ton to make export shipments economically viable.
FIMI said the Indian government’s refusal to lower the 30% export tax in response to the falling international price of iron ore has made exportation uneconomical, when factoring in higher Indian costs of mining.
The triple impact of low international prices, shortage of domestic production and high local prices was prompting local steel mills to look at imports like the government owned and operated Rashtriya Ispat Nigam Ltd. (RINL), which for the first time in more than three decades sought iron ore supplies from global miners like Rio Tinto and BHP Billiton.