The steel space is in focus as the government has given its nod for Steel Authority of India Limited (SAIL) to sell 25 percent of its iron ore output in the open market. The Ministry of Mines said there is a need to take adequate steps to ensure availability of iron ore in the market to meet the demand of domestic steel makers.
Steel secretary Binoy Kumar spoke to CNBC-TV18 about the government's initiatives and the outlook for steel industry in the country. “The government has taken a conscious decision to see that there is raw material security and SAIL has about 70 million tonnes of low grade iron ore by which we mean anything below 58 Fe content,” said Kumar.
He added: “One decision has been that let this low grade iron ore be used, especially in view of the March 2020 situation when there is a likelihood of some disruption in iron ore supply because about 38 working mines would change hands and there could be a temporary dislocation, which we anticipate about 40-45 million tonnes of disruption, which may perhaps happen. So we are taking adequate steps to see that this does not happen.
"Secondly, so far SAIL has got only captive iron ore mines and for the first time the government has taken a decisive step to allow 25 percent of SAIL’s production to be commercially sold.
"Thirdly, Ministry of steel has asked SAIL to ramp up its production, which right now hovers around 26-27 million tonnes, which it utilises for itself. So, if it ramps up production then it can use more iron for commercial sale. This will be opened for sale through a proper mechanism in the open market."
He said that the ministry has also asked National Mineral Development Corporation (NMDC) to ramp-up production, which could add another 9-10 mt of iron ore.
Asked if we would be seeing many more mines like Donimalai changing hands leading to disruption and the time period of the expected disruption, Kumar said: “We are not expecting any length of time and Donimalai will not be repeated. Donimalai was an exception. There are mines which NMDC have in Chhattisgarh, now their lease is going to end on March 31, 2020, but we are already in advance talks, we have already taken measures along with the help of Ministry of Mines and the state government so that disruption is also not likely to happen. Disruption is only going to happen to those mines which are presently with the private sector and mostly these are located in Odisha.”
He added that the Odisha government would also be starting the auction process very shortly. “We are in continuous dialogue with Odisha government and with our Ministry of Mines. So all the three different entities are acting in unison to see that there is absolutely no disruption. I would go to the extent of saying that perhaps there may be more iron ore available next year than what we actually require.”
Asked about demand-supply dynamics of iron ore Kumar said: “As I said Donimalai being exception there also we are working with the state government of Karnataka and our Ministry of Mines, all three of us we are trying to find a solution to the Donimalai case also and definitely that is a very important mine because it produces roughly about 7 million tonnes a year so that is a priority for us.”
Odisha, he said, is one of the major iron ore producing states with a little more than one-third of the total production coming from the state, therefore what happens in Odisha is very important for the industry as a whole and there are about 26 mines that will be up for auction. The process will start very soon and should be completed by the end of this year, he added.
“Secondly, we are also trying to work with the ministry of environment to see what we call environmental clearance (EC) — forest clearance (FC) that is also streamlined so people do not have to wait for length of time to obtain these two clearances.
“Thirdly, so far as availability of iron ore in general to the steel industry is concerned, right now there is absolutely no issue whatsoever. There was slight disruption in iron ore mining in Chhattisgarh because Bailadila area receives heavy rainfall during this time, so the month of August did see a little bit of a disruption but it will be more than compensated this month onwards, already the production has started.
“We don’t want the imports to happen because we have so much of our own iron ore. In the last 4 months our exports have risen up to 11 million tonnes. So there is no dearth of iron ore or availability of pellets in the country at this juncture,” said Kumar.
Talking about steel imports and protection to local steel producers, he said that steel imports in August came down and exports moved up. From April to August we are still a net importer of steel but that is only a marginal increase of imports over exports. “If we go by figures our imports and exports are in control,” he added.