According to Rahul Mittal, chairman of the Sponge Iron Manufacturers Association, India, as the world's leading sponge iron producer, hosts approximately 336 sponge iron plants scattered across the nation. With an annual production of around 50 million metric tons of sponge iron, predominantly utilized by secondary steel producers as raw material, the country faces challenges due to a shortfall in iron ore supply.
During the initial nine months of the current fiscal year that commenced in April 2023, India's iron ore exports surged to 32.2 million metric tons, valued at $2.7 billion, up from 9.5 million metric tons in the previous year. Over 90% of India's iron ore exports are directed to neighboring China. The significant increase in India's iron ore exports has alarmed sponge iron producers, who have expressed concerns about escalating prices and diminishing supplies of this crucial ingredient.
Mittal highlighted the exacerbation of shortages in recent months due to the substantial surge in iron ore exports. Moreover, sponge iron producers have been vocal about supply concerns since the government revoked higher export taxes on low-grade iron ore lumps, fines, and pellets in November 2022, reversing a decision made in May 2022.
While the Federation of Indian Mineral Industries (FIMI), representing mining companies, opposes imposing restrictions on iron ore exports, arguing that India primarily exports low-grade iron ore not widely consumed domestically, Mittal countered this argument. He pointed out that India's sponge iron producers utilize all grades of ore, with many producers relying on low grades. Projections suggest India's sponge iron production to reach 51 million metric tons in the fiscal year ending April 2024, with a 15% growth anticipated in 2024/25, underscoring the escalating demand for iron ore by India's sponge iron producers.
The majority of India's sponge iron output is consumed domestically.
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