JSW Steel Imports Iron Ore as Local Supply Falls
Importing iron ore, buying low-quality ore and operating mills below capacity are the new normal for JSW Steel Ltd, the third-largest steelmaker in India where illegal mining of minerals has been choked by court orders.
JSW, run by billionaire Sajjan Jindal, is importing 500,000 tonnes of iron ore of Australian and South African origin by end-June or July to make up for a domestic shortfall, its joint managing director Seshagiri Rao told Reuters on Wednesday.
This is the biggest monthly import for JSW, which used to use only higher-grade ores from Karnataka and Odisha states but is now buying low-quality varieties from Goa as a court crackdown on illegal mining has cut supplies in these states.
JSW last month won a bid to buy 11,484 tonnes of low-quality ore from Goa. The state has traditionally exported most of its iron ore to China as local steel mills preferred using higher-quality ores from other states and did not have the technology to use lower grades.
Rao said that top Indian iron ore producer NMDC Ltd's move to raise prices by up to 9 percent in June could make imports cheaper than domestic prices.
"Across the country iron ore prices are going up whereas world prices are coming down," Rao said. "If availability is an issue and prices continue to go up, import is the only option."
This could support global iron ore prices, which fell for a sixth straight month in May in their longest losing streak on record, with hefty supply pushing prices to their lowest since September 2012.
NMDC and some other miners have been able to raise prices mainly because Supreme Court ordered the closure of nearly half of Odisha's 56 mines two weeks ago due to the non-renewal of years-old leases.
Odisha is the biggest iron ore producing state in India and the closed mines accounted for about half of its output of more than 70 million tonnes last fiscal year.
"Demand is quite high due to various mining restrictions," an NMDC official said, decining to be named.
India was once the world's third largest exporter of iron ore, sending out more than 117 million tonnes in the fiscal year through March 2010. It slipped to No. 10 last fiscal year, with exports estimated at less than 20 million tonnes.
JSW Steel, whose second-biggest shareholder JFE Steel is the world's ninth-largest steel company and a unit of Japan's JFE Holdings Inc, has been forced to run its 10 million-tonne-per-year plant in Karnataka at about 85 percent capacity due to the shortage of iron ore.
Copyright: Thomson Reuters 2014
