 "Mining, Iron ore")
A decade ago, steelmakers using the blast furnace-basic oxygen furnace route started a high-pitched, well-orchestrated campaign against exports of iron ore, particularly lump ore. Over a period of time, their anti-export drive also included ore fines for which there is still not much use in the country. It can always be argued that beneficiated fines are good for making iron ore pellets. Essar has done a trend-setting job of beneficiating iron ore close to mine heads at Bailadilla in Chhattisgarh and at Keonjhar in Odisha.
Essar, the country's biggest pellet producer with a capacity of 14 million tonnes (mt), has encouraged government-owned ore producer NMDC - which in a forward integration move is building a 3 mt steel plant at Nagarnar in Chhattisgarh - to lay a 135-km-long slurry pipeline to transfer beneficiated ore from Bailadilla in Chhattisgarh to the 2 mt pellet plant next to the steel unit. Pellets find use in iron-making processes.
JSW Steel's plan to build a 10-mt mill in Odisha includes a 280-km slurry pipeline from mines at Barbil to transfer beneficiated iron ore to Paradip for making pellets. Pellets are made by steel companies for captive use or by merchant producers for sale in the domestic and overseas markets. Let's consider the case of Tata Steel, which, in spite of meeting its entire requirements of iron ore from its captive mines, stands as an advocate of pellet use as supplies of lump ore are becoming increasingly difficult while growing mine head-stocks of fines remain an environmental hazard. Tata Steel built a 6-mt pellet plant at Jamshedpur when it embarked on steel capacity expansion to 10 mt there. It will construct a pellet unit of identical size at Kalinganagar in Odisha where steel capacity is to be doubled to 6 mt. According to Indian Bureau of Mines, the estimated total ore mine-head inventory on March 31, 2016 was 186.96 mt. The share of fines in that inventory is well over 150 mt.
Fiddling with export duty under pressure from steelmakers and then court-ordered mines closures across iron ore producing states dragged down Indian ore exports from 117.37 mt in 2009-10 to piffling last year. In an ill-advised move, New Delhi, which earlier encouraged building of pellet plants for value addition to ore fines, slapped a five per cent export duty in 2014 making the Indian-origin product uncompetitive in the global market. The withdrawal of the duty in January 2016 brought some relief to merchant producer-exporters of pellets. The global pellet market, however, remains unfavourable.
R K Sharma, director-general of Federation of Indian Mineral Industries, says: "Had our steelmakers not barked up the wrong tree to ensure ore exports constituting mostly fines fall to 4.50 mt in 2015-16 from a record 117.37 mt in 2009-10, production of this mineral would not have dipped to 155.90 mt from 218.55 mt during this period. The reduced mining activity meant direct and indirect job losses for one million people in remote parts of the country where alternative jobs don't exist."
Sharma's argument rests on the premise that "the more the exports and total use of iron ore, including by local steel mills, the greater will be the prospecting and exploration of resources remaining hidden under the earth. Take Indian experience. In the 14 years to 2013, our iron ore resources were up 9.215 billion tonnes (bt) to 31.323 bt despite our having mined 2.041 bt during this period. This phenomenal rise in resources was made possible because of strong export demand for our ore, especially from China. But, problems arose when export duty was increased to levels which made our ore uncompetitive in world market".
The two giant producer-exporters of iron ore Australia and Brazil have seen their resource base periodically expanding as they go on making bigger and bigger commitments to the global seaborne trade of the mineral. New Delhi has realised that high export duty was harming the iron ore sector. It made amends by removing export duty altogether on both fines and lumps with iron content below 58 per cent. There is scope for further rationalisation of duty on better quality ore.
