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“Any relaxation in export restrictions on iron ore will adversely affect the prospects for India’s steel industry,” Assocham said in a letter to finance minister P Chidambaram on Monday June 24.
“[The sector] is already reeling under a severe crisis due to the non-availability of iron ore over the past couple of years,” it said, adding that this was due to “the suspension of mining in Karnataka and Goa by the supreme court […] coupled with restrictions on mining activities in Orissa imposed by the state government”.
Assocham urged the government to make iron ore available to Indian steel producers in order to increase local steel production and curb imports.
“We can control the CAD by reducing imports of finished steel and coking coal, as India imported about 8 million tonnes of finished steel and about 35 million tonnes of coking coal, worth about $5 billion and $7 billion respectively, [in the year from April 2012 to March 2013],” Assocham secretary general DS Rawat said.
With steel demand in India on the rise, domestic producers are likely to consume almost all the iron ore fines, lumps and sub-grade material produced in the country but will still require imports as well, Rawat added.
He did not indicate the volume of imports that would be needed, however.
“It wouldn’t be a wise decision to relax the restrictions on iron ore exports,” he added.
The supreme court gave permission for mining to resume in Karnataka in an April 18 ruling. Mining in Goa remains banned, however.
Rawat also called for the development of the Jharia Coal field in the Dhanbad district of Jharkhand in order to reduce the country’s coking coal deficit.
Jharia has estimated reserves of around 19 billion tonnes.
The Associated Chambers of Commerce & Industry of India (Assocham) has urged the country’s government not to relax export restrictions on iron ore in an attempt to control the nation’s current account deficit (CAD).