Pellet making companies have urged the Government to provide incentives to use the 150 million tonnes of low grade iron ore dumped as waste by miners.
Steel companies generally prefer ore with iron content of 63-64 per cent, while the one with less than 60 per cent iron content are dumped near the mines.
N D Rao, Vice-President, Pellet Manufacturers' Association of India, said that the Government should consider reducing the royalty on sale of these low grade iron ore dumps to make the process of beneficiation viable.
“Reducing royalty would not only help dispose the dumps safely but also aid in conserving key ingredient used in steel-making,” he said.
Shortage of iron ore
Steel companies are facing huge shortage of iron ore after the Supreme Court banned mining in Karnataka, Odisha and Goa to crack down on illegal miners. The short supply has eased a bit with mining in Karnataka limping back to normalcy.
The low grade iron ore dumps, if not properly disposed, disintegrate during monsoon and may cause harm to environment.
According to the Indian Bureau of Mines, ore with about 45 per cent iron content should be put to use by way of beneficiation. Pellet is the purest form of iron ore used in steel making.
Plea to remove export duty
In a recent meeting with the Union Commerce Ministry, the association has asked the Government to remove the five per cent export duty imposed by the previous Government. It has argued that this levy is choking the industry and will stunt its growth.
The lower domestic demand has resulted in lower capacity utilisation of less than 50 per cent against the global average of 80 per cent, the association said.
Pellet exports have almost come to a standstill ever since the Government imposed the five per cent Customs duty. With large steel players setting up their own pellet plants and exports hit by the duty, the capacity utilisation of standalone pellet plants are expected to drop further.
India has an installed pellet making capacity of 67 million tonnes as of March, 2014. It is estimated to touch 91 mt by the end of this fiscal. Most large steel companies such as Tata Steel (3 million tonnes), JSW Steel (3 mt), Essar Steel (6 mt), Jindal Steel and Power (3 mt) have invested heavily in pellet plants in Chhattisgarh and Odisha.