Iron ore output set to grow 14%

Increase in production will come from Goa, Odisha and Karnataka

Iron ore production is likely to grow 14 per cent to touch 155 million tonnes (mt) in 2014-15. For 2013-14, the production of the raw material remained flat at 136.4 mt compared to 135.8 mt in 2012-13.

For 2014-15, the increase in production is expected to come from Goa, Karnataka and Odisha. While Goa is likely to start production in the second half of the year, Odisha and Karnataka would increase their production.

The miners in Goa are awaiting final order from the Supreme Court on fixing the cap on production. Recently, the central empowered committee of the Supreme Court recommended production cap of 20 mt per annum in Goa. The Indian School of Mines, Dhanbad, had recommended the cap in the range of 27.5 mt to 32 mt per annum. The apex court is likely to pronounce its order on April 15.

Odisha, which accounted for production of 57 mt  in FY14, is likely to increase its production to about 62 mt in FY15, as per industry sources.

In Karnataka, the production is pegged around 20-22 mt, as more mines are likely to get approval to restart their mines. As of now, 25 mines have restarted their production. Presently, 23 mining leases have restarted production with a combined capacity of 10 mt.

“This year, another six-seven mining leases may start production with a capacity of three mt and state-owned Mysore Minerals Limited is also likely to start. If that happens, we can expect another three mt. In all probability, the total production from Karnataka would be in the range of 22-25 mt in FY15,” said H M Khyum Ali, director, Federation of Indian Mineral Industries, Southern Region.

However, National Mineral Development Corporation (NMDC)’s production is unlikely to increase due to huge pileup of lumps. The state-owned miner was allowed to produce 12 mt per annum. But, it has not been able to produce more than nine mt per annum.

“The production will more or less cross the 150-mt mark in FY15. We do not see any big jump in the production in Karnataka because NMDC is likely to slow down the production, as it is facing problems of evacuating lumps. Also, the e-auctions would decide the production numbers. In Goa, some relief might come from the apex court for resumption of mining activity, which is expected to begin around the third quarter of FY15. It might account for about six mt,” said Prakash Duvvuri, head of research, OreTeam Research, a Delhi-based iron ore research firm.

The imposition of five per cent export duty on iron pellets has discouraged their export. As a result, there is an increased supply in the domestic market. The prices of pellets have come down by Rs 1,000 per tonne in the eastern sector. Currently, the prices are hovering around Rs 6,200-6,300 per tonne.

“A 14-15 per cent Y-o-Y rise in iron ore production in India would be highly beneficial to both iron ore and steel industry and would come as a welcome relief,” said Duvvuri.