The Hindu Business Line : `Iron ore supply to domestic steel cos must get priority over exports'

A STUDY by the Federation of Indian Chambers of Commerce and Industry (FICCI) on export and domestic use of iron ore lumps, fines, and pellets in India has stressed for steps to ensure priority in supply of iron ore to domestic steel industry over exports.

According to the study, the projections of steel producers show that growth in demand for iron ore is likely to be fairly high in the next few years.

The estimates project an increase in demand of 28 per cent for iron ore in 2004-05, 11 per cent in 2005-06 and 10 per cent in 2006-07. This looks like a significant pick-up in demand for iron ore given that the quantity of iron ore produced has picked up by an annual average rate of 4.1 per cent in the last six years up to 2002-03.

"This calls for immediate steps for increasing iron ore availability to the domestic steel producers through greater access to captive mines.

"Currently, the captive mines of the private producers account for only around 9 per cent of the total iron ore production even while they contribute around 60 per cent of the total steel production," the study revealed.

The high prices of finished steel products make export of steel products a much more attractive proposition than export of iron ore.

Increased production of higher value-added products and pushing up growth in the manufacturing sector requires that adequate supply of raw materials required for domestic industry should be a top priority of industrial policy, the study states.

Further, the study recommended a number of measures to be implemented on a priority basis to increase domestic supply of iron ore and to restrict unbridled growth of iron ore exports.

These include: increasing domestic supply of iron ore, review policy of iron ore exports, minimise procedural delays and other bottlenecks in acquiring and operationalising iron ore mines to facilitate a faster pick up in domestic production, and improvement in railway infrastructure facilities for movement of iron ore from mines to domestic consumption centres.

The study also urged for a dedicated capacity to be earmarked for new generation steel plant for movement of their raw materials.