India faces iron-ore glut despite mine closures

KOLKATA (miningweekly.com) – India is facing an oversupply of iron-ore fines and lumps, despite half of the country’s iron-ore mines having been closed.

Out of the country’s 518 iron-ore mines, 267 were not operational on May 1, information from the Mines Ministry showed.

Among the reasons for large numbers of mines remaining shut included expiry of existing mining leases, a delay in the renewal of lapsed leases, the absence of environmental clearances as per new guidelines of the Supreme Court and small mines turning unviable under depressed prices.

However, far from resulting in a shortage of supply, India faced a glut of iron-ore fines and lumps, with production from operational mines expected to hit the 180-million-ton mark in the current financial year, with additional carryover stock estimated at 150-million tons.

The rising stockpile had come despite a 63% fall in imports during 2015/16 at 5.6-million tons, with miners apprehending a problem of plenty in the months ahead, a Ministry official has said.

The stockpile on March 31, 2015 had been pegged at 128-million tons, while total iron-ore production in 2015/16 was estimated at 155-million tons.

However, according to the Federation of Indian Mineral Industries (FIMI), the representative body of miners, the production forecast for the current financial year was conservative and could be exceeded considering the headroom available in provinces like Odisha and Karnataka to step up production over the next few months.

FIMI officials pointed out that mines in Odisha were operating at less than 50% capacity. The Environment Ministry had set an aggregate cap on production from the province at 80-million tons a year and if miners’ demand for a hike in the cap was acceded, iron-ore production from Odisha alone had the potential of increasing to 100-million tons in the current financial year.