Indian iron ore - great future with many problems
Published 2010-05-10 00:00:00 | Updated 2010-05-10 15:37:42
500 million tonnes, more than double the production of 2009 (200 Mt), was set as a realistic figure for annual Indian iron ore production in 2020, at the iron ore conference organised by the Indian Journal of Mines, Metals and Fuels in cooperation with Raw Materials Group, Sweden.
Several speakers at the iron ore conference held in Kolkata (Calcutta) maintained that there is no need for political decisions to limit iron ore exports or to stipulate that iron ore mining must only be made by local steel works, if modern technologies and down to earth business considerations are applied. International experts pointed out that the value added by iron ore production itself, without necessarily continuing into steel making, has been the basis of strong economic growth in many different parts of the world, such as Western Australia, Minas Gerais in Brazil and northern Sweden. There are big risks in trying to combine steel making and iron ore mining in the same organisation. The two industries are completely different in their very foundations and souls. Iron ore mining is all about producing the same quality year after year. Steel making by contrast is to sell to customers with continuously varying demands both in quality and quantity. Captive mines have not been proven to be more efficient than specialised miners.
The huge and high quality iron ore resources of India are often left out of the equation when global iron ore deposits are surveyed. This might have been correct in the past, when India's domestic demands were small and when its steel industry was very much closed off from the world. However, in the present situation with Indian steel companies becoming global leaders and with Indian iron ore exports to China surpassing 100 Mt, it is no longer so.
According to the Indian Bureau of Mines (IBM), iron ore resources in the country amount to a total of 26 billion tonnes, of which 15 billion haematite and 11 billion tonnes magnetite. The quality of the Indian resources is excellent, with high Fe content and high share lumpy ore. Almost 60 % of the haematite resources have Fe grades above 62 % and 45 % lumpy ore, 33 % fines and 12 % classified as lump with fines and the balance not classified. These are huge figures which are most probably underestimates for several reasons:
- Detailed exploration has been scanty and shallow and almost no modern exploration work has been done.
- Over the past 25 years resources have further grown in spite of quickly rising production levels.
- The cut-off grade used by the IBM is 55 % which is high by all standards.
It is clear that India's iron ore resources are of a superior quality and far better located compared to many of the deposits which are at present considered for exploitation.
It is indicative of the new climate in Indian mining sector that the hurdles that have to be overcome to reach a production of 500 Mt are now discussed and conventional wisdom contested. To reach this level many legal, technical and political issues have to be addressed:
- Increased systematic exploration activities using modern methods to reach deeper and cover larger areas should be started.
- A major potential source of iron ore units for the steel industry in India is fines. At present lump ore accounts for most of the blast furnace feed. With increasing steel production, a surplus of fines has been available for exports to China. If the fines fraction could be utilised, as it is around the world for sinter or pellet production or for HBI and similar EAF feed, additional volumes of iron ores, which today are either not mined or stored in slime dams and waste heaps would be available for both the domestic steel industry and for exports.
- Consolidate the small, fragmented mines often not operating with modern technology and hence not extracting optimal volumes but leaving iron ore behind which is sterilised for all future. Further these small companies lack the necessary skills, experiences and most important capital to embark on the large projects necessary to grow the iron ore industry.
- Infrastructure including roads, railways and ports must be up-graded. This is a well known problem and perhaps the one which might be most difficult to solve.
- Land acquisition and licensing of mines must be made seamless and all the doubts whether a deposit found by an explorer will really become a mine must be removed. The international norm, that whoever finds a deposit will also be exploiting it, provided he is able to meet with all environmental and other criteria, must be established also in India. With such changes a junior mining sector could get going, which would further stimulate the industry.
- Domestic iron ore prices must reflect the international market situation.
The full remodelling of the Indian iron ore industry is still some years off, but it is clear that the process has begun in earnest. India is gearing up to become a serious competitor to Brazil and Australia in supplying China with high quality large volumes of iron ore for the long term future.
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