The Associated Chambers of Commerce and Industry of India (Assocham) has sought a temporary ban on export of iron ore by the National Mineral Development Corporation (NMDC), saying that the Supreme Court’s interim stay on mining in Odisha would deepen the crisis and lead to more steel imports.
The apex court last week ordered interim stay on iron ore mining in Odisha by companies whose lease agreements have expired and were not renewed by the State Government.
“The temporary closure of about 26 mines in Odisha has created severe crisis for domestic iron and steel industry may result in significant fall in capacity utilisation,” Assocham said, adding that the paucity of key raw material like iron ore will lead to rise in imports of finished steel in the country.
In a letter to Finance Secretary Arvid Mayaram, the national industry body said, “A need is felt to temporarily ban iron ore exports from NMDC despite commitments made to customers in the international market which can be fulfilled by procuring iron ore from Australia or Brazil.” As per Assocham estimates, steel production in India is likely to remain about 86 MT in 2014-15 and the country is likely to face about 40 MT iron ore shortage in the fiscal.
Assocham said if NMDC does not stop exporting iron ore it may lead to an additional iron ore shortage of about 2.5-3 MT.
NMDC is the largest iron ore producer in India with an annual capacity of about 32 MT and sells over 90 per cent of its produce in the domestic market apart from exporting to Japan and Korea under long-term supply agreements.
The industry body has also suggested that the new Government should reduce import duty on iron ore (lumps, fines and pellets) to zero from the current levy of 2.5 per cent in order to safeguard the cost-competitiveness of the domestic industry.
“The recent Supreme Court order to ban illegal mining in Odisha (which accounts for over half of India’s total iron ore production), may result in domestic iron ore production falling to 100 MT in the current FY 2014-15 thereby jeopardising job safety of about 1.25 lakh people directly and indirectly engaged in production,” it said.
The output has notably declined to 136 MT in 2013-14 from peak production level of about 218 MT in 2009-10, said Assocham secretary General DS Rawat.