Iron ore pellets as a solution to steel—making raw materials at the crossroad and dominant constituent of basket of iron ores available for export in the future

Abstract

India's current pellet capacity is around 37 Mt. This is represented by the plants as listed below (Table 1). The capacity increased from 20.70 in 2010 to 37.4Mt/year. This has been necessitated by a drop in iron ore production through bans on production as a result of illegal mining detected in iron ore-producing states like Karnataka and Goa and imposed caps on production on well-known iron oreproducing belts of Orissa. In addition, the incentive provided by the Finance Minister in the budget proposal for 2011–2012 for exports of iron ore pellets, could change India's export basket mix where some of the iron ore would be replaced by pellets. The Minister announced that exports of iron ore pellets would be totally exempt from any duty. By contrast, Finance Minister raised the export duty on iron ore to a flat 20 % from 15 % on iron ore lumps and 5 % on iron ore fines, in keeping with demands by the steel industry wanting more supplies of iron ore at low costs. The duty was subsequently hiked to 30 % uniformly on export of all types of iron ore. Analysts say that in the long term, India's iron ore exports could taper off with more steel capacities coming up locally and iron ore miners setting up pelletisation plants to add value to their iron ore as a means to diversify their risk. The paper dwells on the