Iron ore pellet makers want exclusive blocks at auctions

The makers of iron ore pellets have asked for reservation of iron ore blocks with more than 80 per cent fines deposits exclusively for them. 

"The issue can be addressed by reserving important iron ore blocks to be auctioned under provisions of sub-Rule 3 of Rule 6 of Mineral (Auction) Rules, 2015. Also, the government has to exercise some control over market prices through indexing so that ore is available to plants at reasonable rates”, Pellet Manufacturers Association of India (PMAI) said in a letter to the Union mines secretary Arun Kumar.

The pellet manufacturers have also demanded that the provision to sell up to 25 per cent of the unused iron ore by captive miners be extended to existing mines as well.

Pellet plants have a combined installed capacity of 85 million tonnes across the country. However, hardly 50 per cent of the capacity is utilised and this is due to poor availability of iron ore fines at sustainable prices. Over 75 per cent of the pellet and steel plants don't have captive mines and are dependent on merchant miners for supply of ore. 

During 2016-17, total pellet production in the country was 48.5 million tonnes. Of this, 8.8 million tonnes was exported and the balance was used by the domestic steel industry. 

PMAI alleged that the market is controlled by only a few merchant miners who in the absence of any pricing or indexing mechanism resort to price increase even when there is downtrend in the international market. 

According to the National Steel Policy 2017, the envisaged steel capacity of 300 million tonnes will require 236 million tonnes of iron ore by 2020 and 480 million tonnes by 2030. “The situation makes it necessary to stop any export of usable iron ore in the country unless more reserves are established. Also, beneficiation of low grade ore needs more thrust in terms of providing technology as well as incentive to make it usable in the domestic iron and steel industry”, PMAI stated.

The pellet manufacturing industry has been starving for iron ore and operating at barely 50 per cent capacity despite the country having 28.5 billion tonnes of iron ore reserves. Pellet facilities have been created with huge investments of Rs 40,000 crore. Due to removal of export duty on low grade iron ore fines (with iron grade of up to 58 per cent), many pellet plants have shut down, triggering unemployment.

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