Sponge iron producers seek duties to curb iron ore exports

India has about 336 sponge iron plants spread across the country and produces around 50 million metric tons of sponge iron, which is mostly used by secondary steel producers as raw material.

New Delhi: The sponge iron producers have urged the government to impose duties on exports of low-grade iron ore to stave off shortages of the main raw material in the world's second-biggest crude steel producer.

"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 biggest sponge iron producer, has about 336 sponge iron plants spread across the country. India produces around 50 million metric tons of sponge iron, which is mostly used by secondary steel producers as raw material.

India's iron ore exports touched 32.2 million metric tons during the first nine months of the current fiscal year that began in April 2023 - worth $2.7 billion - from 9.5 million metric tons a year earlier.

More than 90 per cent of India's overall iron ore shipments go to neighbouring China.

The surge in 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 that 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 higher export tax on low-grade iron ore lumps, fines and pellets, reversing the May 2022 decision, he said.

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.

Countering FIMI's argument, Mittal said India's sponge iron producers use all grades of ore. "There are so many producers using low grades."

India is expected to produce 51 million metric tons of sponge iron in the fiscal year to April 2024.

Sponge iron output is expected to grow 15 per cent in 2024/25, Mittal said, 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.