The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has stated that the Indian Supreme Court order for the temporary closure of about 26 iron ore mines in the Indian state of Odisha may result in a significant fall in capacity utilization due to severe shortage of key raw materials like iron ore, leading to a rise in finished steel imports into the country.
In a letter to India's Finance Ministry, ASSOCHAM said that there is a need to temporarily ban iron ore exports by India's state-owned miner National Mineral Development Corporation (NMDC).
According to ASSOCHAM estimates, steel production in India is likely to remain at about 86 million mt in the current financial year, with India facing a shortage of about 40 million mt of iron ore to produce this much steel and, if NMDC does not stop exporting iron ore it may lead to an additional iron ore shortage of about 2.5-3 million mt, thereby reducing steel production by about two million mt.
As SteelOrbis previously reported, earlier this week India's Supreme Court announced a partial mining ban affecting about half of the iron ore mines located in Odisha due to non-renewal of mining leases. Operations of 26 iron ore mines in the state have been suspended until the licenses are renewed.
ASSOCHAM has also suggested that the new government should reduce the import duty on iron ore lumps, fines and pellets to zero from the current levy of 2.5 percent in order to safeguard the cost-competitiveness of the domestic industry.