IMPERATIVES FOR  IRON ORE EXPORTS K K KUMAR GENERAL MANAGER (M&L) MSPL LIMITED
THE CONTEXT <ul><li>Recent call by a section of industry to ban iron ore exports </li></ul><ul><li>Inadequacy of iron ore ...
Lack of enabling  environment for large scale  Commercial mining Low capital investment in exploration Restrictive resourc...
Qty: Million tonnes Figures in parenthesis indicate decrease (-)/increase (+) in resources Notes : (1) These resources do ...
RESOURCES- INDIAN CONTEXT <ul><li>India has 25.2 billion tons of known iron ore resources as on 1.4.2005. </li></ul><ul><u...
EXPLORATION – INDIAN SCENARIO <ul><li>Exploration activities have been minuscule, confined to </li></ul><ul><ul><li>Cutoff...
ADEQUACY OF RESERVES <ul><li>HODA committee concluded that export canalization and licensing to be discontinued, reserves ...
The Take away <ul><li>Resources have increased over a period of time in-spite of mining large quantity for domestic consum...
<ul><li>INADEQUACY OF RESOURCES   </li></ul><ul><li>-  A FICTION </li></ul>
STATE-WISE PRODUCTION :  RATIO OF LUMPS, FINES AND CONCENTRATES Quantity: `000 tonnes SOURCE   Indian Bureau of Mines, Nag...
Figures in paranthesis indicate the %age  contribution of captive and non-captive by public and private sectors respective...
<ul><li>60% of the iron ore production is in the form of fines which at present do not have  much domestic demand. Another...
(000 tonnes) Source : Joint Plant Committee, Kolkata – for steel production Indian Bureau of Mines, Nagpur – for iron ore ...
<ul><li>Even after meeting the full demand of the steel industry and also exports, there is a surplus  </li></ul><ul><li>T...
IRON ORE EXPORTS (Million tonnes) <ul><li>If FINES are not evacuated from mines, </li></ul><ul><li>production of LUMPS wil...
STOCKPILE Qty.: Million tonnes Note : In addition iron ore is lying at Railway Station,  in transit and ports.   Source : ...
<ul><li>User specific requirement are a priority </li></ul><ul><li>Results in to multiple small mines that meet specific r...
Enabling policy & environment  for large scale  Commercial  mining Development in Infrastructure Full harness of Resources...
CONCLUSION <ul><li>Total Iron Ore Production in India in 2005-06 - 155 Million ton </li></ul><ul><li>Total Export from Ind...
<ul><li>Fines were virtually “waste” till export requirement came in 2001 </li></ul><ul><li>Only surplus fines are exporte...
<ul><li>EXPORTS ARE SUSTAINABLE EVEN AFTER MEETING DOMESTIC NEED </li></ul>
ECONOMIC RATIONALE OF EXPORTS <ul><li>New resources would be discovered only when there is incentive to invest both time a...
ECONOMIC RATIONALE OF EXPORTS <ul><li>Export market offers twin advantages </li></ul><ul><ul><li>Taking advantage of preva...
THE INEVITABLE CONCLUSION <ul><li>EXPORTS ARE IMPERATIVE </li></ul>
THANK YOU
Upcoming SlideShare
Loading in …5
×

Imperatives For Iron Ore Exports

3,083 views

Published on

Presentation made during FIMI conference, Goa in 2007

Published in: Business, Technology
1 Comment
0 Likes
Statistics
Notes
  • Be the first to like this

No Downloads
Views
Total views
3,083
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
90
Comments
1
Likes
0
Embeds 0
No embeds

No notes for slide

Imperatives For Iron Ore Exports

  1. 1. IMPERATIVES FOR IRON ORE EXPORTS K K KUMAR GENERAL MANAGER (M&L) MSPL LIMITED
  2. 2. THE CONTEXT <ul><li>Recent call by a section of industry to ban iron ore exports </li></ul><ul><li>Inadequacy of iron ore reserves – fact or fiction </li></ul><ul><li>Sustainability of iron ore exports </li></ul><ul><li>Economic rationale for exports </li></ul>
  3. 3. Lack of enabling environment for large scale Commercial mining Low capital investment in exploration Restrictive resource allotment reflected in smaller leases Incomplete discovery of resources INDIAN MINING INDUSTRY–PRESENT SCENARIO Indian Mining industry in a negative loop Smaller contribution by mining sector is a drag on national economy despite large resource base Drastic policy changes a must to break this negative loop Reflects low resources base
  4. 4. Qty: Million tonnes Figures in parenthesis indicate decrease (-)/increase (+) in resources Notes : (1) These resources do not include around 1000 million tones of haematite iron ore recently discovered by DMG, Chattisgarh in Kabirdham district. (2) Above resources are with a cut-off grade +55% Fe and roughly upto 50 metre depth estimated with sparce and far-between drilling. Source: Indian Bureau of Mines, Nagpur RESOURCES 25249 (+3141) 532 22108 (-679) 656 22787 (+5223) 470 17564 Total 10619 (-63) 10682 (+92) 10590 (+4495) 6095 Magnetite 14630 (+3204) 11426 (-771) 12197 (+728) 11469 Heamatite As on 1.4.2005 Produced 2000-2005 As on 1.4.2000 Produced 1990-2000 As on 1.4.1990 Produced 1980-1990 As on 1.4.1980
  5. 5. RESOURCES- INDIAN CONTEXT <ul><li>India has 25.2 billion tons of known iron ore resources as on 1.4.2005. </li></ul><ul><ul><li>Added 6000 million ton in between 1980 and 2000 even after mining 1126 million ton </li></ul></ul><ul><ul><li>Added 3141 million ton in between 2000 and 2005 even after mining 532 million ton. </li></ul></ul><ul><ul><li>As Mining intensifies, more exploration and discovery of resources </li></ul></ul>
  6. 6. EXPLORATION – INDIAN SCENARIO <ul><li>Exploration activities have been minuscule, confined to </li></ul><ul><ul><li>Cutoff grade of 55% </li></ul></ul><ul><ul><li>Average Depth of 60 meters </li></ul></ul><ul><ul><li>Lump finding (as fines has limited usage in the country) </li></ul></ul><ul><ul><li>Conventional method of exploration </li></ul></ul><ul><ul><ul><li>No state of the art technologies like remote sensing etc. is used </li></ul></ul></ul><ul><li>Exploration conducted till 1980 </li></ul><ul><ul><li>Thereafter resources is computed based on data furnished by companies in their annual returns to IBM </li></ul></ul>
  7. 7. ADEQUACY OF RESERVES <ul><li>HODA committee concluded that export canalization and licensing to be discontinued, reserves are adequate and there is no basis for basing any policy changes on inadequacy of reserves and the position to be reviewed after 10 years </li></ul><ul><li>Degree of finiteness of the reserves can only be assessed after complete exploration. But the ‘finiteness ‘ issue has been brought to the forefront even before exploring the reserves potential </li></ul>Both domestic and export demand can be met
  8. 8. The Take away <ul><li>Resources have increased over a period of time in-spite of mining large quantity for domestic consumption and exports – indicating that resources are not static and are dependent on extent of exploration. </li></ul><ul><li>Strict reliance on UNFC classification based on “economic criteria” in fast changing economic conditions is not appropriate. </li></ul><ul><li>In China, the fact that even 10-15% Fe grade iron ore is being mined clearly establishes the importance of dynamically changing economic scenario that impacts the reserve-resource definitions. </li></ul>
  9. 9. <ul><li>INADEQUACY OF RESOURCES </li></ul><ul><li>- A FICTION </li></ul>
  10. 10. STATE-WISE PRODUCTION : RATIO OF LUMPS, FINES AND CONCENTRATES Quantity: `000 tonnes SOURCE Indian Bureau of Mines, Nagpur Figures in paranthesis indicate the %age contribution of lumps, fines and concentrates respectively in the total production Note : p - provisional figures 154436 (100) 3893 (3) 87900 (57) 62643 (41) 145942 (100) 5253 (4) 82537 (56) 58152 (40) 122838 (100) 6199 (5) 67679 (55) 48960 (40) ALL INDIA TOTAL 4958 (100) ---- 3728 (75) 1230 (25) 3721 (100) ---- 2864 (77) 857 (23) 1626 (100) ---- 1225 ((75) 401 (25) Others 49880 (100) ---- 22103 (44) 27777 (56) 41750 (100) ---- 18866 (45) 22884 (55) 31288 (100) ---- 12715 (41) 18573 (59) Orissa 33669 (100) 2922 (9) 19415 (58) 11332 (33) 37962 (100) 4350 (12) 21324 (56) 12288 (32) 31635 (100) 5090 (16) 17643 (56) 8902 (28) Karnataka 17435 (100) ---- 10760 (62) 6675 (38) 16719 (100) ---- 9181 (55) 7538 (45) 14682 (100) ---- 8196 (56) 6486 (44) Jharkhand 23744 (100) 971 (4) 18445 (78) 4328 (18) 22672 (100) 903 (4) 17526 (77) 4243 (19) 20246 (100) 1109 (6) 15246 (75) 3891 (19) Goa 24750 (100) ---- 13449 (54) 11301 (46) 23118 (100) ---- 12776 (55) 10342 (45) 23361 (100) ---- 12654 (54) 10707 (46) Chhattisgarh Total Conc. Fines Lumps Total Conc. Fines Lumps Total Conc. Fines Lumps 2005-06(p) 2004-05 2003-04
  11. 11. Figures in paranthesis indicate the %age contribution of captive and non-captive by public and private sectors respectively in the total production. Source : Indian Bureau of Mines, Nagpur Note: p - provisional figures Qty.:Million tonnes PRODUCTION AND DOMESTIC CONSUMPTION <ul><li>Increase in iron ore production followed demand from China which led to opening </li></ul><ul><li>up of closed mines and optimum utilisation of working mines. </li></ul><ul><li>India acts as a swing producer to fill in supply gap from Brazil and Australia </li></ul>154.44 (100) 119.36 (77.29) 35.08 (22.71) 145.94 (100) 110.74 (75.88) 35.20 (24.12) 122.84 (100) 89.35 (72.74) 33.49 (27.26) Total 95.63 (100) 84.74 (88.61) 10.89 (11.39) 88.91 (100) 76.24 (85.75) 12.67 (14.25) 65.30 (100) 55.24 (84.59) 10.06 (15.41) Private Sector 58.81 (100) Total 34.62 (58.87) Non-Captive 57.03 (100) Total 34.50 (60.49) Non-Captive 57.54 (100) Total 34.11 (59.28) Non-Captive 24.19 (41.13) Captive 2005-06(p) 22.53 (39.51) Captive 2004-05 23.43 (40.72) Captive 2003-04 Public Sector Sector
  12. 12. <ul><li>60% of the iron ore production is in the form of fines which at present do not have much domestic demand. Another 10-12% becomes fines while processing lumps. </li></ul><ul><li>Thus around 72% of the total iron ore production is fines only. </li></ul>
  13. 13. (000 tonnes) Source : Joint Plant Committee, Kolkata – for steel production Indian Bureau of Mines, Nagpur – for iron ore production Exporters and MMTC – for iron ore exports e-estimated IRON ORE CONSUMPTION BY STEEL MILLS 28894 26261 26348 24988 23483 - Captive mines Consumption (e) 23629 21889 18626 15948 14230 - Non-captive mines 154436 145942 122838 99072 86226 Production 52523 48150 44974 40936 37713 Total 10116 48020 30443 11461 18982 2002-03 12636 19647 15294 6873 Surplus 89277 78145 62570 41640 Exports Iron Ore : 41660 38486 34248 27964 Total 19966 18471 14236 10202 B-Secondary Producers 21694 20015 20012 17762 A-Main Producers Steel : 2005-06 2004-05 2003-04 2001-02
  14. 14. <ul><li>Even after meeting the full demand of the steel industry and also exports, there is a surplus </li></ul><ul><li>This indicates that iron ore for domestic steel industry is not a constraint </li></ul><ul><li>Most of the iron ore exported is in the form of fines and also most entire low grade fines (-62% Fe) are exported that have no domestic demand. </li></ul>
  15. 15. IRON ORE EXPORTS (Million tonnes) <ul><li>If FINES are not evacuated from mines, </li></ul><ul><li>production of LUMPS will be adversely </li></ul><ul><li>affected </li></ul><ul><li>During rains FINES get washed away into </li></ul><ul><li>rivers/rivulets/agricultural fields creating </li></ul><ul><li>environmental problems. </li></ul><ul><li>Most of the MOUs signed in Orissa, </li></ul><ul><li>Jharkhand and Chhattisgarh are for steel </li></ul><ul><li>making through DRI/sponge iron route </li></ul><ul><li>which will only require CLO and not fines. </li></ul>79% Fines 83% Fines 84% Fines
  16. 16. STOCKPILE Qty.: Million tonnes Note : In addition iron ore is lying at Railway Station, in transit and ports. Source : Indian Bureau of Mines, Nagpur Conclusion: Production being led by demand from China, there is enough exportable surplus over and above domestic demand .
  17. 17. <ul><li>User specific requirement are a priority </li></ul><ul><li>Results in to multiple small mines that meet specific requirements, leading to: </li></ul><ul><ul><li>Sub optimal utilisation of resources </li></ul></ul><ul><ul><li>Higher costs as scale economics are derived </li></ul></ul><ul><ul><li>Cost considerations make investment in beneficiation a low priority </li></ul></ul><ul><li>Low initiative to exhaust available resources with higher expenditure </li></ul><ul><li>Enables Higher outlay for exploration leading to discovery of resources </li></ul><ul><li>Usage of technology and beneficiation to harness available resources </li></ul><ul><li>Long term investment horizon </li></ul><ul><li>Investment in core Infrastructure Results in </li></ul><ul><ul><li>Higher volumes </li></ul></ul><ul><ul><li>Multiple product </li></ul></ul><ul><ul><li>Full resource utilisation </li></ul></ul><ul><li>Increased contribution to state/country finances </li></ul>CAPTIVE MINING COMMERCIAL MINING COMMERCIAL MINING DRIVES HIGHER PRODUCTION & PRODUCTIVITY
  18. 18. Enabling policy & environment for large scale Commercial mining Development in Infrastructure Full harness of Resources Efficient & Productive operations Competitive environment leading to Higher & Cost effective output Competitive exports and dominant position in International markets Economy Grows Steel sector Grows PATH TO PROGRESS Domestic Demand fully met
  19. 19. CONCLUSION <ul><li>Total Iron Ore Production in India in 2005-06 - 155 Million ton </li></ul><ul><li>Total Export from India in 2005-06 – 89.3 Million tons and 93.27 Million tons in 2006-07 </li></ul><ul><ul><li>84% of overall exports is Fines </li></ul></ul><ul><li>Fines generation is a natural phenomenon and by no means can be stopped and only lumps production can be maintained </li></ul><ul><li>About 72% of the iron ore production is fines </li></ul><ul><li>Steel production in India are primarily lump-based </li></ul><ul><li>Limited Domestic usage of Fines </li></ul><ul><ul><li>Limited capacity of sinter and pellets in India </li></ul></ul>
  20. 20. <ul><li>Fines were virtually “waste” till export requirement came in 2001 </li></ul><ul><li>Only surplus fines are exported </li></ul><ul><ul><li>Surplus of 13.7 million ton iron ore production in 2005-06 after meeting domestic requirement of 52 million ton and export of 89.3 million ton </li></ul></ul><ul><li>Exports enables mining industry to meet the steel industry’s demand for iron ore lump </li></ul><ul><li>Commercial mining leads to mineral conservation ~ this is a established world over </li></ul><ul><li>Captive operations leads to “ skim the milk” practices and sub-optimal use of minerals. Present addition between 2000-2005 only in non-captive stand-alone mines; exploration in captive mines is least due to enormity of lease area. </li></ul>
  21. 21. <ul><li>EXPORTS ARE SUSTAINABLE EVEN AFTER MEETING DOMESTIC NEED </li></ul>
  22. 22. ECONOMIC RATIONALE OF EXPORTS <ul><li>New resources would be discovered only when there is incentive to invest both time and money. The track record of Govt. being what it is, private sector needs to participate actively in exploration. </li></ul><ul><li>Captive mines – with the sole objective of providing cheap raw materials to steel plants have little incentive to prospect aggressively. </li></ul><ul><li>Stand alone mines which fully exploit minerals without selectivity have driven the increased production seen in recent times. Share of stand-alone mines has increased from 73% to 77% in just 2 years i.e from 2003-04 to 2005-06. </li></ul>
  23. 23. ECONOMIC RATIONALE OF EXPORTS <ul><li>Export market offers twin advantages </li></ul><ul><ul><li>Taking advantage of prevailing international prices </li></ul></ul><ul><ul><li>Incentivising increased production through activating idle mines </li></ul></ul><ul><ul><li>Increased production through machanisation and exploration by plough back of surpluses. </li></ul></ul><ul><li>This in turn makes available more production to domestic market </li></ul>
  24. 24. THE INEVITABLE CONCLUSION <ul><li>EXPORTS ARE IMPERATIVE </li></ul>
  25. 25. THANK YOU

×