November 21, 2008

India\'s iron ore resources can increase significantly – ICRIER

According to a study carried out by Indian Council of Research in International Economic Relations, India's iron ore resources can increase significantly from the current estimated level and there is no urgency to rush into any conservationist policy as regards to ore exports.

The study said that the size of mineral resources is a dynamic concept and depends on exploratory efforts, which have not been enough in India for lack of investments.

India's iron ore resources have increased by an average of 307 million tonne per year during 1980-2005 despite continuous extraction for domestic consumption and export. Currently, ore resources are estimated at a little over 25 billion tonne, considering a depth of 50 to 60 meters. Deposits can be found and economically mined even up to 200 meters and more.

The study pointed out that though there are concerns over reserves in view of the proposed capacity additions, a significant share of steel gets recycled. With increased use of scrap, demand for iron ore will be less.

The study added that in the current scenario, export restrictions will make it difficult to take care of excess fines. Restrictions on trade in iron ore will also restrict the economies of scale to Indian mining Companies and they may remain inefficient in global comparison forever. Such restrictions could also lead to closure of some of the mines, leading to loss of direct and indirect jobs.

India's iron ore production in 2006-07 was around 181 million tonne, which was in excess of the consumption level. India exported about 93 million tonne during that fiscal, which is expected to come down to about 88 million tonne in the current fiscal. Nearly 80% of exported ores are fines, because those are not adequately used in India. India's competitiveness in the Chinese market has already started falling, the study points out.