The manufacturers of iron ore pellets, an intermediate product in steel making have asked for reservation of iron ore blocks with 80% or more fines content for them. Such a move they reasoned would ensure availability of raw material at affordable prices and help enhance the production level of pellets.
Pellet makers under the banner of Pellet Manufacturers Association of India (PMAI), said that iron ore blocks meeting the above criteria could be reserved for them during auctions.
Though pellet manufacturing capacity in the country is 85 MnT pa, only about 50% of this rated capacity is utilized. The below par capacity utilisation is due to high pricing of iron ore fines, the key ingredient for pellet making.
Around 75 per cent of the steel and pellet plants across the country are dependent on merchant miners for iron ore supplies. PMAI in a letter to the Union mines secretary Arun Kumar alleged that in the absence of any pricing or indexing mechanism, the merchant miners sold fines at exorbitant rates. This has led to a situation where many pellet plants have already shut down while some others are on the edge of closure.
During 2016-17, total pellet production in the country was 48.5 MnT. Of this, 8.8 MnT was exported and the balance was used by the domestic steel industry.
According to the National Steel Policy 2017, the envisaged steel capacity of 300 MnT will require 236 MnT of iron ore by 2020 and 480 MnT 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 BnT 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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