Iron ore stockpile at mine heads could hurt production post auctions

Inventory at pit-heads of mines lapsing by next March end largely has lower grade fines with Fe content of up to 62%, which has no takers in domestic market

The huge inventory of iron ore at pit-heads of mines lapsing by March 31, 2020 is going to pose a hurdle to new miners who acquire them after auctions.

The stockpile of iron ore has mounted to 163 million tonnes (mt) across mines in the country. Odisha and Jharkhand combined together account for 137 mt of the accumulated ore. The inventory has a preponderance of lower grade fines with iron (Fe) content of up to 62 per cent for which there are no takers in the domestic market. Nationwide, 329 mining leases have their leases ceasing by March 2020. But only 48 mines are operative now with 24 of them in Odisha.

Federation of Indian Mineral Industries (Fimi) feels that unless the non-moving stocks are liquidated, they will prove to be a major impediment to commence mining operations and undertake scientific mining by the prospective bidders.

“The prospective bidders will not be able to bid for them because apart from the fact there will be no domestic buyer and export not possible because of high export duty, the limited space at the mines will come in the way of utilising full potential of the mine and limit the production”, said Sunil Duggal, president of Fimi at the body’s recent annual general meeting (AGM).

Fimi feels the only outlet for liquidating the piled up iron ore is exports. And, to make exports of baser grade fines viable, it has reasoned that the Government of India should waive 30 per cent duty for up to 62 per cent Fe content to make Indian ore competitive in international seaborne trade.

Merchant miners are unsettled over the accumulated iron ore and its baleful impact on the surrounding ecosystem. As per the provisions of the amended Mines and Minerals- Development & Regulation (MMDR) Act 2015, the lessees can move their stocked ore within six months of ending of lease validity.

“It is not feasible to move the entire stockpile of iron ore in a span of six months of ending of lease tenure. And, if the ore is not liquidated in this time-frame, the government can seize the material and auction it. So, we have urged the government to grant us storage permits to stash the ore on the lines of what they have accorded to end user industries”, said a standalone miner.

On July 24 this year, Odisha’s steel & mines department had issued a notification to provide storage licenses for iron ore to be stored in intermediate stockyards.

The state government has invoked the powers under Rule 10 B of Odisha Minerals (Prevention of Theft, Smuggling & Illegal Mining and Regulation of Possession, Storage, Trading and Transportation) Rules, 2007 to permit storage licenses valid only for iron ore.

“The stockyard will be used only for the storage of iron ore meant for captive use of the licensee in its plants located within the state and shall not be despatched for trading purposes or for export outside the state. All the requisite clearances and approvals as required by law shall be obtained and maintained by the licensee”, the government notification read.