India relaxes ban on iron ore mining

Recently, the Supreme Court of India further relaxed the ban on iron ore mining in Karnataka and allowed some mines in the state to resume production operations. At the same time, however, the miners are still anxiously waiting for the Supreme Court's handling of the mining ban in Goa.

The decision of the Supreme Court of India has enabled India to resume the production of 63 mines. These mines have been identified as having no illegal mining problems, or the problem is minor. Twelve mines have been allowed to resume production last year. India industry insiders analyzed that after the Supreme Court’s relaxation of the ban, it is expected that the iron ore production in Karnataka will reach approximately 15 million tons in the 2013 fiscal year, although it is still far below the 40 million tons to 50 million tons before the ban. , but higher than the 2012 production.

Mining ban affects steel mill capacity utilization Since 2011, a series of corruption scandals prompted the Supreme Court of India to halt all mining activities in Karnataka. Last year, under the joint "effect" of the ban on the country and the related ban on iron ore mining in Goa, the country's iron ore output plummeted and its export volume was reduced to almost zero. Implementation of the ban on iron ore mining to date has severely damaged the interests of some steel companies such as JSW Steel and some mining companies such as SesaGoa, which have large mines in Karnataka. . Data show that in February of this year, India’s total iron ore production dropped by 8% compared with the same period of last year, which was the third consecutive month of decline.

In 2011, following the release of a mining ban by the Supreme Court of India, JSW had to cut production by 70% at the Vijayanagar factory in the state. After relaxing the ban in the Supreme Court and allowing the government-owned India's largest miner, the National Mining Development Corporation of India, to auction iron ore inventories, the mill's capacity utilization rate has returned to 80%. JSW's co-director General, Seshagiri Rao, welcomed the decision of the Supreme Court. He said: “This relaxation ban not only provides breathing space for the steel industry in the region, but also helps to provide direct and Indirect employment opportunities."

Not only that, the decline in Indian iron ore production caused by the mining ban has also had an impact on the development of the global steel industry. In the 2012/2013 fiscal year ending March 31, 2013, India’s export of iron ore dropped sharply to 18 million tons, which is only 1/3 of the export volume of iron ore in the previous fiscal year. The number of iron ore in China decreased by 54.75% year-on-year to 33.06 million tons. In the first two months of this year, the amount of iron ore that India exported to China fell sharply by 87.69% year-on-year, and it has already ranked 14th from the third largest importer.

Mine has to wait for two years at full capacity

Compared with the optimism of Indian steel companies, industry analysts are more cautious. They believe that the ruling of the Supreme Court could not promote rapid recovery of iron ore production in Karnataka to its previous level.

At present, there are already many mines in India that are eligible for re-operation. However, due to problems such as leases, penalties, and resettlement and renovation, there are still 35 to 40 mines that cannot be operated. The industry estimates that these previously suspended mines will take at least two years to fully resume operations. “Generally speaking, this is good news for steel companies because companies have always wanted more iron ore supplies,” said Agrawal, an Indian mining and metals executive at Ernst & Young. “But once the mine is closed, the miners will have to spend a lot of time to resume production, and some of the miners that have been allowed to resume production are still not ready for production. Therefore, it takes time to restore production to the production level before the ban is implemented. And the output will never be as high as it was in 2011."

Poddar, vice president of the Federation of Indian Mineral Industries, said: "All mines in Karnataka will resume production and operate at full capacity and will take two years. It is estimated that the production capacity will be about 25 million tons. He predicted that in the fiscal year 2013/2014, the state’s iron ore production will not exceed 15 million tons. Prior to the prohibition of illegal mining activities, Karnataka’s iron ore production was 40 million tons/year to 50 million tons/year, making it the second largest iron ore producer in India.

In addition, Indian miners are still anxiously waiting for the Supreme Court's handling of the mining ban in Goa. Goa is the main source of iron ore exported from India. At present, mining activities in the state are still completely banned. Ambar, Managing Director of Fomento Resources, the second-largest mining company in Goa State, said: “While the mines in Karnataka will be partially resumed, India will continue its zero export of iron ore.” In the state, all newly-produced iron ore in the state must meet the needs of the domestic steel industry. Moreover, high rail freight will allow companies to make up for their export business.”

Indian steel companies have stepped up their overseas mining efforts Since the implementation of the Indian iron ore mining ban, Indian steel companies have faced a chronic shortage of iron ore supplies. In desperation, Indian steel companies began to actively seek the import of iron ore from overseas countries, and Indian officials also actively promoted these cooperation.

On April 11th, Indian Steel Minister Verma said in meeting with Zimbabwean officials that it will help the country explore its huge iron ore reserves. “Zimbabwe has a huge reserve of low-grade iron ore, which is a resource partner that the Indian steel industry can develop and cooperate with.” Verma’s visit coincided with a total of US$750 million launched by Essar Holdings in India. The merger of Zisco Steel in Zimbabwe has stagnated. It is reported that the two sides have experienced problems in the transfer of mining assets. And Sisko’s iron ore reserve is a key factor in attracting investment from Essar Holdings. Essa had previously announced plans to build a port in Mozambique to facilitate the transport of iron ore.

JSW announced this year that it will import 5 million tons of iron ore from Australia and South America each year to maintain its normal production. The Jindal Steel and Electric Power Company (JSPL) also sought overseas iron ore supply from overseas at the end of last year. The company said it will spend at least US$2 billion in the purchase of West African iron ore projects to supply the company’s steel mills in Oman and Ship back to India. In addition, the National Mining Development Corporation of India signed a memorandum of understanding with Brazil’s Amplus last year to acquire the latter's iron ore assets in the state of Amapa in northern Brazil. The company also held talks with the Brazilian government in hopes of ensuring port transportation so that Export iron ore to be mined in the future.

India's top five iron ore production states fiscal year 2012/2013 and 2009/2010 fiscal year output comparison unit: one million tons