Post Date : May 27, 2021
A man-made scarcity has been created by the reckless export of iron ore, thereby choking the logistics facility in Odisha and threatening the survival of home metal firms, informed steel manufacturer JSW Steel, which had to take a close call on shutting its operations in Dolvi due to the artificial shortage.
As a consequence of the COVID- induced disruptions, iron ore production last fiscal came down by almost 44 million tonnes (mt) to 202 mt against 246 mt recorded in FY20. However, despite the slump, India exported 60 mt against 37 mt in FY20, resulting in an overall short supply of 67-70 mt in India, including incremental exports and drop in production.
Together, the incremental exports and drop in manufacturing has created a scarcity of iron ore in the nation and surged up the cost.
Steel production in India last fiscal dipped by only 6 mt at 109 mt. A six mt lower steel production translates into iron ore demand drop of 11 mt, whereas supply dipped by 67 mt. With the sharp fall in supply, iron ore price jumped 156 per cent to INR 6,560 a tonne from INR 2,560 per tonne last fiscal. At present, high grade iron ore of 64 per cent iron content is bought at about INR 10,000 a tonne.
Iron ore costs weigh heavy
While the huge jump in export has been reasoned by a drop in the demand by the miners, the sudden surge in costs within the nation-which has come as a result of the reckless export and decelerated manufacturing-has caused the closing of many metal companies.
Seshagiri Rao, Joint Managing Director, JSW Metal informed that the scarcity of iron ore was so acute that the Dolvi plant would have been shut if not for the captive mine in Odisha. Most of the secondary metal models needed to shut their operations when iron ore costs zoomed instantly.
He also shared how shifting the iron ore from Odisha mine to Dolvi plant in Maharashtra was a logistics nightmare as exporters booked all of the accessible vehicles, rakes and barges by paying big premium.
Source: Hindu BL