Odisha eyes 120 mt iron ore output in FY17

Riding on recovery of global iron ore prices and uptrend in consumption of ore in the domestic market

Riding on the recovery of global iron ore prices and uptrend in consumption of ore in the domestic market, Odisha is aiming at an output of 120 million tonnes (mt) this financial year (FY17). The projected output, if achieved, would mean a spurt of 50 per cent over 80.86 mt the state produced in FY16.

Odisha is the largest iron ore-producing state and its ore production went up nearly 50 per cent in 2015-16 from 47 mt to 80.86 mt. This came on the back of the state government’s swift orders to extend the validity of mining leases after the enactment of the amended Mines and Minerals Development & Regulation (MMDR) Act.

“Odisha has recorded one of the fastest growth in iron ore output in the last financial year and it has the potential to cross the 100-mt mark in production this financial year,” Union mines secretary Balwinder Kumar said at a conference recently.  Also, the Supreme Court’s directing the state government to reconsider cases of 102 shut mines is expected to give a fillip to production once these mines resume operations. The reopening of such mines could augment output by up to 40 mt.

“The state government has already extended the validity of 60 mines. More mines are expected to restart operations later this year. We are hopeful that iron ore production can touch 120 mt if miners produce up to the optimum limits. We are also encouraging the merchant miners to cater to export markets after meeting the requirement of domestic end use industries”, said a government official.

Pan-India iron ore production moved up 20 per cent in FY16, rising from 129 mt to 155 mt. Market estimates have put FY17’s iron ore production in the country to be in excess of 180 mt. In Odisha, merchant miners have secured permission to produce up to 155 mt. But, they were producing way below the approved limits due to lack of demand. Also, export of the ore remained unremunerative with exporters finding it hard to recover their cost of production.

However, miners are upbeat over the changing dynamics. Recovery in global prices and parity in export and domestic tariff for iron ore have made exports a profitable business of late.   “For 62 per cent grade iron ore, we are getting $2-2.5 a tonne from exports. The realisation from low grade ore (with iron content below 58 per cent) is even better with margins of around $5 a tonne,” said an official with a stand-alone mining company.  In 2015-16, India shipped 6 mt of iron ore, marking a 25 per cent growth in exports. Towards the end of FY16, exports of iron ore, especially of the lower grade, had gathered steam after the government lifted the 30 per cent export duty in the 2016-17 Budget.