India’s sponge iron manufacturers urged the government to ban or levy 30pc duty on iron ore pellets exports to secure ore supplies for domestic producers and ensure availability of high-grade fines, according to media reports.
Federation of Indian Mineral Industries cited in a letter to the Industries and Mines department that the sector struggles with a shortage of iron ore pellets due to the COVID-19 crisis. Pellet Manufacturer’s Association of India, however, said that any ban on exports could hurt the industry.
In 2019, iron ore pellet exports rose by around 53pc to 12.86mn mt from 8.42mn mt in 2018, according to Ministry of Steel data.
Iron ore pellets and lumps are used to produce sponge iron, while steel is made using a combination of iron ore fines, scrap or sponge iron. The yield from iron ore-based sponge is better, although the cost involved in sponge iron production varies with different inputs such as iron ore lumps or pellet.
Sponge manufacturers opined if iron ore pellets are converted into sponge iron, India can reduce dependency on imported steel scrap. Secondary steel producers prefer scrap or sponge iron over iron ore fines.
Other than state-owned Kudremukh Iron Ore Company Limited no other companies should be allowed to export iron ore pellets, said sponge producers in West Bengal. The government should ban iron ore pellet export for private players, said producers.
On the contrary, Pellet manufacturers believe India has enough stocks of iron ore pellet to sustain domestic consumption. Additionally, a ban on exports would lead to a huge pile up of iron ore fines. Manufacturers could increase production, if there is any shortage, said iron ore pellet manufacturers.