Assocham for ban on iron ore exports from NMDC

Assocham fears that closure Odisha mines would create acute shortage of iron ore for domestic iron and steel industry

Associated Chambers of Commerce and Industry of India (Assocham), an apex body of trade and industry, has urged the Union Finance ministry to ban the exports of iron ore from National Mineral Development Corporation (NMDC) as a temporary measure to bridge the shortage of iron ore in the country arising out of closure of 26 mines in Odisha on the basis of a Supreme Court order.

The apex court had ordered closure of these mines as their leases were not renewed and asked the state government to take a decision on their applications for second and subsequent lease renewal within six months. These mines were earlier operating under the deemed renewal clause of the Mineral Concession Rule, 1960.

Assocham fears that the closure of these mines would create acute shortage of iron ore for domestic iron and steel industry and force them to cut capacity utilisation. It would lead to rise in finished steel imports in the country, it said. The apex court order could affect operations of captive mines of leading steel makers Steel Authority of India Ltd (SAIL) and Tata Steel. Seven mines of Tata steel and two mines of SAIL were operating under deemed extensions.

“There is a need to temporarily ban iron ore exports from NMDC despite commitments made to customers in the international market which can be fulfilled by procuring iron ore from Australia or Brazil, thereby fulfilling its export obligations, besides it will also improve NMDC’s export sales realization which is far lower than domestic sales realization,” said Assocham in a letter addressed to Arvind Mayaram, Union Finance Secretary.

NMDC, the largest iron ore producer in India, has production capacity of 32 million tonnes (mt) per annum. It sells over 90 per cent of its produce in the domestic market and exports the rest to Japan and Korea under long-term supply agreements. NMDC’s iron ore production was over 27 mt in 2012-13 and 30 mt in 2013-14 and it exported about 1.6 mt and 2.5 mt in these two years respectively. Assocham estimates that steel production in India is likely to remain about 86 mt in the current fiscal with India facing about 40 mt iron ore shortage. If NMDC does not stop exporting iron ore, it may lead to an additional iron ore shortage of about 2.5-3 mt, thereby reducing the steel production by about two mt.