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Indian sponge iron manufacturers have urged the government to put tariffs on low-grade iron ore exports to prevent shortages of the world's second-largest crude steel maker.
"We have urged the government that there is a shortage of iron ore, (so) please intervene and levy export duty," Rahul Mittal, chairman of the Sponge Iron Manufacturers Association, told Reuters in an interview.
India, the world's largest sponge iron producer, has over 336 sponge iron facilities across the country. India produces about 50 million metric tonnes (MMT) of sponge iron, mostly used as a raw material by secondary steel makers.
India's iron ore exports touched 32.2 MMT during the first nine months of the current fiscal year that began in April 2023—worth $2.7 billion—up from 9.5 MMT a year earlier. More than 90% of India's iron ore shipments go to neighbouring China. The surge in India's iron ore exports has rattled sponge iron producers, who have complained about rising prices and falling supplies of the key ingredient in sponge iron making.
Mittal said a sharp jump in iron ore exports has exacerbated shortages in recent months. But sponge iron producers have been raising concerns about supplies since the government, in November 2022, scrapped a higher export tax on low-grade iron ore lumps, fines, and pellets, reversing the May 2022 decision.
The Federation of Indian Mineral Industries (FIMI), an industry body of mining companies, has asked the government not to impose curbs on iron ore exports. FIMI has argued that India ships out only low-grade iron ore, which is not widely consumed within the country. In countering FIMI's argument, Mittal said India's sponge iron producers use all ore grades. "There are so many producers using low grades."
India is expected to produce 51 MMT of sponge iron in the fiscal year to April 2024. Mittal said sponge iron output is expected to grow 15% in 2024-25, highlighting the rising requirement of iron ore by India's sponge iron producers. Most of India's sponge iron output is consumed within the country.
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