The steel industry is passing through one of the most challenging times. The industry has been impacted by lower demand from the automobile and infrastructure sectors. This apart, sourcing raw material such as iron ore and coal has become very difficult for most of the steel companies.

The Government needs to invest more on infrastructure projects to revive steel demand. It should also announce policy measures to make such investments attractive for investors. At present, infrastructure projects largely depend on banks for funding.

The iron ore mining issues in Karnataka, Goa and Odisha have hit steel companies hard. The shortage of iron ore is so acute that some steel makers are importing iron ore, the the basic raw material for steel making, when the country has estimated iron ore reserves of 28 billion tonne.

In fact, it has been a role reversal for India. Not long ago, China, one the world’s largest steel producers, was dependent on iron ore from Goa for running its plants. Today, India has to import iron ore from South Africa and Canada.

India used to produce 200 million tonnes of iron ore a year and export about half of it before the Supreme Court banned mining in Karnataka to curb illegal mining in 2011. Moe recently, similar action was taken in Goa and Odisha.

Sustainable plan Of the total 170 mines in Karnataka, the Supreme Court allowed 18 mines to start operations, subject to the operators fulfilling reclamation and rehabilitation criteria. Nine mines, which used to produce about 50 million tonnes before the mining ban, have already started production and the supply constraints are easing .

In Goa and Odisha, the Supreme Court is working with the State Government to formulate a sustainable plan to stop illegal mining and streamline the entire process.

While the Odisha Government has renewed the licence of eight captive mines of steel companies, the Supreme Court-appointed Central Empowered Committee is expected to submit its report after making an assessment of other mines.

The hike in iron ore prices in India has been arbitrary; it contradicts the trend in the overseas markets. This has forced some of the companies with captive iron ore mines to consider imports. While iron ore prices in the international markets have fallen 20 per cent in last two months, NMDC, the country’s largest iron ore miner, has hiked prices by 7-9 per cent this month.

Apart from iron ore, coal is another burning issue — pushing up cost of steel production. India has to depend on imports despite having thermal coal deposits of 100 million tonnes and coking coal reserves of 35 million tonnes. The steel industry expects the Government to rectify the inverted import duty structure on iron ore and steel.

While import of iron ore attracts customs duty of 2.5 per cent, steel can be shipped into the country from Japan and South Korea by paying a duty of 1.9 per cent under the free trade agreement.

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