Iron ore output in the largest producing state Odisha would fall by around 10 per cent in 2012-13 due to evacuation problems as large quantity of unsold minerals stacked at the mining sites are hurting further production, said miners and industry bodies.
During 2011-12, the state excavated 60 million tonne (mt) iron ore, 20 per cent less than the previous financial year. In the current fiscal, the output would further come down to 55 mt, the analysts said.
“A couple of years ago, we used to produce nearly 80 mt iron ore because of boom in export demand. Since the exports trade has contracted because of higher duty and lower prices, the output would remain around 55 mt,” said an official of a mining company.
Iron ore exports from Odisha nearly halved in 2011-12 to 13 million tonne, after the sharp rise in export duty coupled with poor Chinese demand. As the international export prices have shed 33 per cent in the current fiscal to $100 a tonne, the outbound trade will be much lower, he said.
Meanwhile, the state steel and mines department has capped iron ore output at 52 mt in key mining circles Koira (12 mt) and Joda (40 mt. Other key circles contribute about 8-9 mt production annually. Miners said, output at the key sites could even drop below the capped quantity, because of evacuation problems and lower exports.
“There is a possibility that output at Joda and Koira could fall below 52 mt as there is huge evacuation problems these days,” said R L Mohanty, president of East Zone Miners' Association (EZMA).
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In order to promote sustainable mining and check indiscriminate mineral excavation which posed threat to environment, the state government has capped the daily truck movements at the mining circles at 1,000 per day along with stringent rules for truck transportation.
Besides, a recent decision by Paradip Port Trust (PPT), the second largest iron ore exporting port in the country, to auction all the iron ore plots inside the harbour area as per a High Court order, followed by a notice to all plot holders to vacate their area , has created bottlenecks in dispatch of minerals from mining sites, he rued.
“Apart from the poor demand, the evacuation problem is huge amid higher export duty and other issues besieging the sector. Though domestic demand is absorbing the output, there is no large demand for fines in the country”, said Mohanty.
In absence of the export demand, many miners and steel makers are planning to set up pellet plants to use the powdery ore, which can be used as an alternative to lumpy ores.
However, as the large scale capacity addition of the pellet plants would take at least five years, miners said output would be under continued pressure till then.