October 1, 2020: Taking a leaf out of Prime Minister Narendra Modi’s call to shrink trade with China, the secondary steel producers have urged the government to ban iron ore export to China.
Secondary steel units, which contribute 50 per cent of steel production, depend on domestic iron ore supply unlike large primary steel producers who own captive iron ore mines.
This apart, the sponge iron production of about 31 mt and pellet plants with 85 mt capacity are also dependent on domestic iron ore. The secondary steel industry annually require about 90-100 mt of iron ore, said Rajeev Singh, Director General, Indian Chamber of Commerce, in a letter addressed to the Prime Minister’s Office.
Odisha and Chhattisgarh have about 136 sponge iron ore units with a capacity of 24 mt but produced only about 13-14 mt. However, amidst the current raw material crisis situation, it is expected to be cut down further to 6-7 mt by this year end.
About 30 per cent of the sponge iron capacity is idle due to shortage of raw material. This situation is creating stress not only in banking industry but also creating unemployment, said Singh.
Iron ore production between April and September was down 50 per cent to 47 million tonnes due to expiry of many mining leases and reallocation of leases. However, exports in the same period was up 63 per cent to 22 mt.
Last financial year, iron ore exports rose 133 per cent to 38 mt from 16 mt in 2018-19. Of the overall shipments, exports to China accounted to 82 per cent at 30.86 mt due to strong demand.
Kamal Aggarwal, Secretary General, All India Induction Furnaces Association, said India mainly exports lower grade iron ore to China, Japan and South Korea, which have signed free trade agreements.
Though ore exported is of lower iron content, he said it has blend of over 58 per cent Fe iron, causing a huge unchecked dent to the exchequer, he said.
Export of ore with over 58 per cent iron content attracts 30 per cent export duty as it is widely used by the domestic industry.
India started increasing iron ore exports since last year to bridge the global supply gap from Brazil and Australia.
Instead of exporting iron ore, Aggarwal said it should be converted into value added steel products and then exported to achieve Prime Minister Narender Modi’s dream of ‘Making for the world’.
Source: Business Line
