Iron ore fines consumption to double in 3 yrs

The consumption of low-grade iron ore (fines, below 63 per cent of Fe content) in India is likely to more than double in three years, on substantial increase in consumption by existing and proposed pellet plants.

A study by a research company, Avendus, forecasts domestic consumption of fines to increase from 43.3 million tonnes in 2008-09 to 70 million tonnes by 2012, and to 100 million tonnes by 2015, mainly due to potential increase in pelletisation and sintering capacities over the next three years.

Of the total iron ore production of 226 million tonnes in 2010, the share of fines and lumps was 55 per cent and 45 per cent, respectively. But, due to adequate availability of high-grade ore (lumps with more than 63 per cent of Fe content), the domestic steel industry does not prefer fines. Miners, therefore, have no option but to export in order to continue excavation activity.
 

RISING OUTPUT Iron ore production (million tonnes)
	2006-07	2007-08	2008-09	2009-10
Iron ore	187.7	213.2	215.4	226.0
Lumps	88.3	97.9	95.6	100.0
Fines	98.2	114.9	119.2	125.0
Concentrate	1.1	0.5	0.6	1.0
Source : Ministry of Mines, Avenuds Research

“No new exploration is currently happening due to the advance payment mechanism in the form of royalty and transportation. This provision will make exploration unremunerative. Besides, existing age-old mines are depleting. Hence, the domestic steel industry will have no option but to use fines for future growth,” said Haresh Melwani, CEO of the Goa-based iron ore miner and exporter H L Nathurmal & Co.

Interestingly, deputy steel secretary Sunil Bharadwaj had recently said: “Pelletisation is the need of the hour for steel and mining industries.”

Since a tonne of pellet plant requires between Rs 200 crore and Rs 220 crore investment, an investment of Rs 20,000 crore is required to convert the entire 100 million tonnes of low-grade iron ore that India currently exports, according to a senior official of MSPL Ltd, an independent ore mining company.

Exports of fines have allowed iron ore miners to supply lumps to electric arc furnace and sponge iron units that do not have their own captive mines. This has helped miners optimally utilise their resources. About 72 per cent of total iron ore exports (105.9 million tonnes) in 2009 were in the form of fines. The same level was maintained in 2010.

India had four pelletisation plants, with a total capacity of 18 million tonnes, by the end of March 2010. This is forecast to increase to 30 million tonnes by March 2012 and further to 51.7 million tonnes by the end of 2015. Major capacity additions are likely by Essar Steel, Jindal Steel and Power, Ispat Industries and NMDC. Total iron ore fines consumed by steel units in 2009 stood at 18.9 million tonnes.

The rising domestic consumption of fines is likely to help miners optimally utilise resources, providing support to the domestic iron ore industry.

Federation of Indian Mineral Industries secretary general R K Sharma, however, feels pellets will have to compete with iron ore lumps on pricing.

Hence, Indian steel companies had so far been concentrating on pellet plants for captive consumption. Fimi welcomes the conversion of low-grade iron ore to pellets.