Wednesday, March 09,
The exemption of export duty on iron ore pellets may not be enough to boost production of pellets as miners may be discouraged by moderate demand in global markets and the high cost of building such plants..*
The government has proposed in the 2011-12 budget to exempt iron ore pellets from export duty.
Iron ore pellets are made by melting and refining the powdery, low-grade iron ore fines. The approximate cost of setting up a Pellet plants requires an investment of Rs.300-400.
Industry experts said the export market for pellets was not as big as that for iron ore lumps and fines, and there is limited demand in the domestic market. Pellets comprise about 1% of India’s iron ore exports, which stood at 117.4 million tonnes (MT) in 2009-10, from a production of 226 MT.
“China has an overcapacity of pellet-making. They prefer to buy India’s fines that they can blend with Brazilian and Australian ores,” a trader working for a Chinese trading house.
Within the country, the two top steel firms, Steel Authority of India Ltd (SAIL) and Tata Steel Ltd, have captive mines supplying them with high-grade iron ore lumps, while the newer, midsize Essar Steel Ltd and JSW Steel Ltd have invested in pellet-making plants.
“Maybe 5-10 of the 200-250 iron ore miners will be able to set up pellet plants,” said S.B.S. Chauhan, adviser at Federation of Indian Mineral Industries in New Delhi.
Iron ore miners say secondary steel makers, which typically use the electric arc method of making steel and have small capacities, to be a good customer base for pellets.
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