NEW DELHI (Reuters) - JSW Steel (JSTL.NS), India's No. 3 steel maker, said it expects imports of metallurgical coal to stay flat at 7-8 million tonnes in 2014/15, indicating its mills will continue to run below capacity due to soft demand and a shortage of iron ore.
The company said in December its 10 million-tonne-per-year mill in Karnataka state would not operate at more than 80 percent capacity in the near future as supply of key feedstock iron ore stays weak. It has also slowed plans to nearly triple annual capacity to 40 million tonnes in the next decade.
Steps to curb illegal mining in Karnataka and neighbouring Goa have led to a sharp cut in output of iron ore in India, once the third-largest exporter. Karnataka is gradually ramping up production after the country's top court lifted a ban there.
"Our coking coal (metallurgical coal) imports will stay the same but we expect the iron ore situation in India to improve next year," JSW Steel's joint managing director Seshagiri Rao said on Wednesday.
"More and more mines are getting opened in Karnataka and we expect Odisha's production to rise as well."
Still, iron ore production in Karnataka is expected to rise to about 22 million tonnes in the year ending March 2015, below an annual limit of 30 million tonnes. Odisha and Karnataka are the biggest iron ore-producing states.
JSW Steel, whose second-biggest shareholder JFE Steel is the world's ninth-largest steel company and a unit of Japan's JFE Holdings (5411.T), was on occasions forced to import ore for a 3.3 million-tonnes-per-year coastal plant in Maharashtra state.
The short supply is one of the reasons companies such as JSW Steel and Jindal Steel and Power (JNSP.NS) bid for UK trader Stemcor's Indian iron ore assets, which are up for sale.
But Rao said there was little progress on the sale.
"We don't really know what their intention is, whether they would like to proceed," he said. "When we submit a bid, we should receive what their intention is. We don't really know today."
Stemcor spokesman Charles Armitstead could not be contacted for comment. He said in February that Stemcor continued to have discussions with a number of parties regarding the sale.
Stemcor, a private British firm controlled by members of the Oppenheimer family, owns an iron ore mine in Odisha with a capacity to produce 3 million tonnes and a 4-million-tonne a year iron pellet plant.
Editing by Susan Fenton