Low-grade iron ore may help tackle steel headache
NEW DELHI (Reuters) - Indian steelmakers are making a big push to use locally mined low-grade iron ore fines that are usually exported, a move that could help the world's No. 4 steel producing nation boost near-stagnant domestic output and cut imports of the alloy.
India's steel imports rose 15 percent to an all-time high of 7.87 million tonnes, worth $6 billion, in the fiscal year to March 2013, as output of steelmaking raw material iron ore was slashed by production bans in key states.
The surge in India's imports helped steelmakers from other parts of Asia cope with softer demand at home but that might prove to be brief if Indian mills are able to source more iron ore locally and thus raise production.
The moves by the mills may also aid India's steps to rein in imports to address a persistent current account deficit that helped push its rupee currency to a record low last week.
Steelmakers, including JSW Steel Ltd (JSTL.NS), Essar Steel, Prakash Industries (PRKI.NS), Monnet Ispat & Energy (MNET.NS), Adhunik Metaliks (ADME.NS) and Steel Authority of India (SAIL.NS), are investing in plants that can process low-grade iron ore dug from the ground and usually exported to China.
About 100 million tonnes of low-grade fines available in top producing state Odisha alone could be used to produce 45-50 million tonnes of steel, said Essar Steel Chief Commercial Officer Shivaramkrishnan.
"Obviously that will have its own pressure on steel prices and make them more competitive vis-à-vis products from countries such as Korea, Japan and others, and lower imports," he said.
India's consumption of low-grade fines is expected to rise to about 120 million tonnes by 2020 from about 80 million tonnes in the past fiscal year, said N.K. Nanda, technical director at NMDC (NMDC.NS), India's largest iron ore producer.
Higher use of low-grade, dust-like fines also means smaller iron ore imports for India where a drop in output tripled its imports of the raw material to 3 million tonnes in the fiscal year ended March 31. But for Indian steel plants, most of which are located away from the coasts, imports are not cost-effective.
Steel production in India, which consumes only 59 kilograms of steel per person compared with a world average of 200 kilograms, rose just 2.5 percent to 78 million tonnes in the last fiscal year.
INCREASED PELLETIZING CAPACITY
India used to be the world's third-largest shipper of iron ore, but exports slumped to 18 million tonnes in 2012-13 from a high of 117.4 million tonnes in 2009-10 due to a court clampdown on illegal mining. Most of the exports were fines, which are extracted along with higher grades.
Industry body ASSOCHAM, which represents steelmakers, last month urged the government to discourage exports of iron ore that can be used at home, saying that the country should export steel to bring in dollars instead of sending out iron ore.
"It's always better to export value-added products like steel, but realistically it is not always possible," said Bhavesh Chauhan, a senior analyst with Angel Broking, adding many firms were not yet able to use very low-grade ores.
Mineral Enterprises, owner of four iron ore mines, has in the past year and a half sold 6.6 million tonnes of fines stockpiled over two decades to companies such as JSW Steel.
"Indian companies have been forced to take whatever is available and cook, there's no option but to use low grades, very low grades," said Basant Poddar, owner of Mineral Enterprises and senior vice president of the Federation of Indian Mineral Industries.
Because Indian firms did not have plants able to process low-grade iron ore fines, most generally use ore with iron content of more than 60 percent, although more than half of the country's iron ore output is fines with grades of as low as 45 percent.
But that is changing.
JSW Steel, India's third-largest steelmaker, commissioned a 20 million tonne-a-year fines processing plant last fiscal year and is looking to invest more to substitute high-grade ores with inferior grades, Chairman Sajjan Jindal said.
The processed fines are then generally converted into pellets, which can then be used to make steel. Higher pellet-making capacity means the fines can be used to make steel and both Essar and JSW plan to raise their pelletizing capacity.
Pellet-making capacity in India has jumped to about 60 million tonnes from nearly nothing a few years ago, according to Essar's Shivaramkrishnan.
(Additional reporting by Prashant Mehra in Mumbai and Jatindra Dash in Bhubaneswar; Editing by Manolo Serapio Jr. and Muralikumar Anantharaman)
- Tweet this
- Share this
- Digg this
- Obama, Modi vow to boost strategic ties, create model for world
- Preview: Basel fans baffled by new coach Sousa's switches
- Preview: Arsenal must now beat Galatasaray, says Cazorla
- Police arrest 140 for religious clashes in Vadodara as Modi tours U.S.
- Modi orders officials to clean loos on Gandhi's birthday
U.S. President Barack Obama and new Indian Prime Minister Narendra Modi vowed on Monday to expand and deepen their countries' strategic partnership and make it a model for the rest of the world. Full Article | Full Coverage
China final HSBC PMI steady in September on stronger global demand but risks remain Full Article
Police arrest 140 for religious clashes in Vadodara as Modi tours U.S. Full Article