Key miners in Odisha look to ramp up iron ore production on firm demand

According to a recent report by CARE Ratings, iron ore production in the country is projected to rise by 2-5% in this financial year

Key merchant miners in Odisha are looking at scaling up their iron ore mining capacities because of robust demand. Apart from the firm demand from end-use industries, buoyancy in prices is spurring miners to expand output.

KJS Ahluwalia, a major non-captive miner, has sought green clearance to raise capacity at its Nuagaon iron ore mines from 5.62 million tonnes per annum (mtpa) to 7.99 mtpa. The miner is also keen to install a beneficiation plant with two-mtpa capacity along with crusher and screen plants. The facilities are to come up within the miner's leasehold area.

Aditya Birla Group-owned Essel Mining & Industries Ltd, too, has proposed to enhance the capacity of its Koira iron ore mines from four to six mtpa. The public hearing for the proposed expansion is scheduled for October 30.

Besides, Thakurani Iron Ore Mines, under the leasehold of Kaypee Enterprises, has sought to expand its production capacity from 5.5 to 7.99 mtpa.

"Demand continues to be strong in both the domestic and international markets. Miners are scaling up to meet the enhanced demand as outlook is firm", said a mining industry source.

According to a recent report by CARE Ratings, iron ore production in the country is projected to strengthen by two-to-five per cent in this financial year on stable demand from infrastructure and automobile industries. Iron ore production in the last financial year was 210 million tonnes, a growth of nine per cent year-on-year.

Of late, iron ore prices have been on a rampage in the domestic market. NMDC Ltd, the largest producer, announced its second price hike for September recently. The central PSE raised the price of lumps by 8.4 per cent to Rs 3,850 per tonne, and those of fines by 6.43 per cent to Rs 3,310 a tonne. The company ascribed the price hike to lower production due to rains, robust demand for ore and firming up of steel and sponge iron prices.

Iron ore fines prices have soared 80 per cent in Odisha between June and September despite international prices staying range bound. Fines prices till the last round of hike soared from Rs 1,862 to Rs 3,350. Lumps prices, too, had moved up 29 per cent in the period under review, increasing from Rs 4,094 to Rs 5,300 per tonne. By contrast, prices of benchmark Fe-62 grade fines inched up moderately from $63.95 to $66.2 per tonne.

Some end-user industries in Odisha feel merchant miners were pressuring iron ore prices by producing below the approved EC (environment clearance) limits. Odisha is the biggest iron ore producer- the state logged 102 million tonnes of output in 2017-18.

The state has an approved iron ore mining capacity of 163.8 mtpa. Of this, the merchant or non-captive lessees have approvals to mine 118.35 mt. In FY18, 26 non-captive miners in the state despatched 67 mt, denoting 65.79 per cent of their approved EC (environment clearance) limit of 101.96 mt. Iron ore despatches have been well below the agreed EC limits as between FY14 and FY18, they never exceeded 70 per cent.