Measures Taken To Avoid Likely Disruption In Iron Ore Supply: Steel Ministry Report

The Steel Ministry has taken measures to arrest likely disruptions in iron ore supply and cut India's import dependence on select countries for coking coal, according to a report.

The steel industry is facing challenges in the short as well as in the long term in raw material security, the ministry said in its annual report for financial year 2019-20. Therefore, the ministry is working to ensure raw material security for the sector, it said.

Iron ore and coking coal are the two key raw materials used for steel-making.

"A disruption in supply of 45-50 million tonnes iron ore is expected in 2020-21, owing to the expiry of about 37 working merchant mines (more than 250 mines in total) on March 31, 2020," the report said. "The Ministry of Steel along with the Ministry of Mines has worked out a strategy to mitigate the likely shortfall."

Steel Authority of India Ltd., the country's largest integrated steel producer, was given permission to sell 70 million tonnes of low-grade fines lying at its mines. The company was also allowed to sell 25% of the total fresh quantity mined from its captive mines.

SAIL, under the Ministry of Steel, has over 20 captive mines spread across Jharkhand, Odisha, Chhattisgarh and West Bengal.

The ministry said it has also submitted a proposal to the Ministry of Mines for reducing the royalty on iron ore fines from the existing 15% to 5% to incentivise beneficiation and pelletisation as well as reduce the stockpile of low-grade fines dumped at mine heads.

"The amendment made in Minerals (Mining by Government Company Rules) 2015 by the Ministry of Mines will help the steel CPSEs to get their mines renewed with certainty...," it said.

On supply of coking coal, the ministry said an attempt is being made to diversify the coking coal import sources by importing the fuel from countries like Russia and Mongolia.

The total import of coking coal in the country is about 56 million tonnes annually. The ministry estimated its cost at about Rs 72,000 crore.

Out of the 56 million tonnes, about 45 million tonnes are imported from Australia alone, while the rest is imported from South Africa, Canada and the U.S.

The ministry is in talks with Russia and Mongolia for supply of coking coal. This will provide India more options to source coking coal.

Meanwhile, SAIL has been granted renewal of its Tasra coking coal mine by the Jharkhand government in November 2019.

A request has also been made to the Ministry of Coal to consider granting long-term linkage of raw coking coal to SAIL from Kalyaneshwari coking coal block allocated to Bharat Coking Coal Ltd., a Coal India Ltd. subsidiary.

This coking coal shall be washed at SAIL's Chasnalla washery in Jharkhand.

"The Ministry of Coal has also agreed to allocate through the reservation route, Rabodih and Rohne coking coal blocks to RINL and NMDC, respectively, for which these CPSEs shall be setting up washeries with 2.5 and 2.24 million tonnes per annum capacity, respectively," it said.