Indian steel industry may see a hike in its operational
cost, along with the already high financing cost in the near future, as they
are forced to use low-grade iron ore as raw material due to halting of operations
in high-grade mines. “Steel producers are forced to use low-grade iron ore
to run reasonable capacity. This may increase their operational cost due to
higher power consumption,” Federation of Indian Mineral Industries (FIMI) Vice-president Basant Poddar said.
Earlier, while high-grade ore was used by the domestic
industry to produce steel, low-grade ore was exported to other countries, especially China. Goa had been the largest producer of low-grade ore in the
country, but the Supreme Court had last year completely banned mining in the
ecologically sensitive state.
Following the halting of mining in many other states like
Karnataka and Odisha, availability has become an issue, FIMI said. Most of the
steel companies have to use low-grade iron ore with high-grade for converting
it to steel as high-grade ore is unavailable due to halting of mining
operations in many producing regions.
However, Poddar said it would be better for steel plants to
blend low-grade with high-grade iron ore for better use of the resource. On the
opening of category-A mines in Karnataka, Poddar said seven mines had already
opened in the state and others will follow soon. He also said the state is now producing
around 3 million tons (mt) of ore.
Karnataka would not
be able to produce more than 15 mt ore in the next financial year, while the
plants in the state alone need 30 mt for running at optimal capacity he further
added.
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