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Iron ore production in FY16 estimated to grow 10% to 140 mn tonnes

Bengaluru March 25, 2015

With the passage of the Mines and Minerals (Development and Regulation) Amendment Bill, 2015 by the Parliament, the action will now shift to respective mineral bearing states for further action. Though it is expected that the new Act will pave way for higher iron ore production, a lot more depends on how quickly state governments set the ball rolling in terms of auction of mining leases.

According to ministry of mines, as many as 199 mining concessions including 15 iron ore leases are expected to be auctioned by various state governments in the next few months.
 
Unless state governments act immediately, the production of iron ore in the coming year is unlikely to be better than the last few years. The Federation of Indian Mineral Industries (FIMI), the apex body of mining industry, estimates iron ore production at 135 million tonnes in 2015-16, a mere 8% growth over the current year.
 
In 2014-15, the production is estimated at 125 million tonnes. Of this, Odisha will be the major contributor at 50 million tonnes and is followed by Chhattisgarh at 25 million tonnes. Jharkhand and Karnataka stand at subsequent places with 19 million tonnes and 17 million tonnes respectively.
 
"A minor growth in production could be seen in the states of Karnataka next year. Goa will start production only towards the second half of next financial year. If all goes well, Goa could produce around 10 million tonnes, while Karnataka might add 5 million tonnes more. Odisha will continue to be the largest producer next year as well," Basant Poddar, Senior Vice President, FIMI told Business Standard.
 
He said, in addition to auction of mines, state governments should also support more explorations to identify new mining reserves and put them up for auction.
 
"There is a total uncertainty prevailing in mining industry as state governments are not coming forward to take quick actions. A lot depends on state governments and the Centre as to how fast they start the process to auction mining leases," R K Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI) said.
 
The industry has been waiting for several years now to get new mining concessions in all states, he said.
 
According to him, there are many impediments in the growth of iron ore production such as huge pile up of iron ore stock at mine heads. The quantity is estimated at 124 million tonnes as of March 2014. Of this, 104.43 million tonnes are iron ore fines and the balance are lumps. In Odisha alone, the 74.28 million tonnes of ore is piled up.
 
"Unless these stocks are cleared, there can be no fresh mining. Drastic fall in the prices of iron ore in overseas markets and 30% export duty has prevented miners from exports, which resulted in pile up of stocks," Sharma said.
 
Though the ministry of environment has revoked suspension of environment clearances to all mining leases in Goa, the actual mining is unlikely to start before October this year. Even if the state governments speeds up the process of handing over the EC and other clearances to miners, they will not production before monsoon season gets over.
 
Analysts tracking the sector say that miners in Goa will not jump into resuming production because of lack of demand for low-grade iron ore in the domestic market. They are also not in a position to export with the current duty structure and low prices prevailing in the international markets.
 
"Rise in global slowdown and low international prices are major factors of worry for Goan miners. Fresh mining is affected due to unsold stocks in all states. We expect, the production to hover around 140 million tonnes during the next financial year," Monica Bachchan, Director, Metalogic Projects Management Services, a Delhi-based metals and mining consultancy firm said.
Source : Business Standard
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