JSW Steel is considering the option of importing iron ore to tide over any disruption in supplies of the key steelmaking input in the next two months in wake of the recent Supreme Court order that is set to affect mining across 26 mines in Odisha. The company's decision is likely to be influenced by two favourable factors, Rupee appreciation and international iron ore prices currently at an 18-month low.
"We are assessing the option of importing iron ore to maintain our supplies. However, we are yet to take a call on the quantity of imports. The rupee has appreciated in recent days and global ore prices are at their lowest in recent months. This offers a window of opportunity," Jayant Acharya, director-marketing of the company said. In case the company decides on ore imports, it is likely to be utilized at its port-based Dolvi unit in Maharashtra. "However, imports would remain a costlier option," the official added.
While the Rupee has gained 18 per cent against the US Dollar since August 2013, riding on hope of a strong government at the Centre, international iron ore prices have on the other hand slumped to $98.5 per tonne, reaching their lowest level since September 2012 on weaker economic prospects in China.
The ban on 26 Odisha mines is expected to impact 20 million tonnes (mt) of iron ore including, 12.5 mt of merchant supplies over the next six months, according to a recent research report by Espirito Santo Securities. The state had produced 70 mt of ore from 56 mines last year (FY14) close to half the country's total output. India has been an exporter of iron ore. But continuing problems in the mining sector may force other Indian steel companies to also opt for imports this year.
"We expect supplies to be affected in Odisha so domestic steel companies could be forced to look at ore imports this year," a metals sector analyst said. Incidentally, Tata Steel was reported to have recently imported a shipload of Australian fines for testing purpose.
JSW Steel has, so far, been blending and using ore from Karnataka, Odisha and NMDC's Bacheli mines to meet its requirement, estimated at 19-20 mt per annum. The company's recent decision to participate in e-auction in Goa for the first time to purchase iron ore, is also part of a larger strategy to keep all its supply options open. For this, the company will be looking at a combination of sourcing from Goa, buying from NMDC and possible imports to avert shortfall in supplies over the next few months.
Source:- economictimes.indiatimes.com
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