Resumption of mining operations at the Donimalai mine will improve iron ore supply in the country and help ease prices of the key steel making raw material, experts say.
Mining at NMDC's 7-million tonnes per annum (MTPA) Donimalai mine in Karnataka resumed from Thursday.
After remaining closed for over two years, the country's largest iron ore miner company was able to resume operations following the necessary permission and clearances from the Karnataka government.
Arnab Hazra, deputy secretary-general of the Indian Steel Association (ISA), the country's apex body that represents the interest of domestic steel industry, said Donimalai is an important mine in the southern region. It will help the mills in the Southern India with smooth supply of raw material.
Anil Kumar Chaudhary, former CMD of the country's largest steel maker SAIL, said, "It has been possible by the efforts taken by the steel ministry to resolve the issue."
Resumption of mine will also help enhance NMDC in meeting its production targets.
"This resumption of mining (at Donimalai) will increase supply of iron ore for steel making. Increased supply will lead to easing of prices of the raw material," R K Sharma, secratary general of miners' body Federation of Indian Mineral Industries (FIMI), told PTI.
Iron ore is a key raw material used for producing steel besides coking coal.
To produce every 1 million tonne (MT) of steel, almost double amount of iron ore is required.
NMDC former chairman and managing director (CMD) N Baijendra Kumar termed the development as "positive" for the domestic steel industry.
Another 7 MT of iron ore will be back into the supply chain, he said adding that NMDC contributes about 18-20 per cent to India's total iron ore requirement annual.
When asked for his comments, Jayanta Roy, senior vice-president and group head (corporate sector ratings) of ICRA, said, "This should be good for the industry, definitely."
This will also rectify the demand-supply balance. Besides, the production at Donimalai will replace the iron ore being brought into Karnataka from other states, Roy said.
Further, the prices of iron ore are also expected to cool down, he said.
As per industry data, the values for 62Fe (ore with 62 per cent iron content) reached about USD 172 per tonne by the middle of December. This level was last recorded in early 2013.
NMDC, under the steel ministry, is the country's largest iron ore miner.
The company, which has been in the business of mining iron ore for over six decades, produces about 35 MT iron ore from its three iron ore complexes in the country one in Donimalai in Karnataka and two are in the Dantewada district of Chhattisgarh.
In 2018, NMDC suspended iron ore mining at the Donimalai mine following a decision of the state government to impose 80 per cent premium on the iron ore sales from the mine.
The capacity of Donimalai mine is 7 MTPA. The mine has reserves of about 90-100 million tonne (MT) which may last for 15-20 years.
State-owned NMDC aims to utilise 97 per cent of its production capacity to produce 35 million tonne (MT) of iron ore this fiscal and has set an ambitious target of producing 100 MT by 2030.
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