Government moots raising floor price for iron ore as steel prices shoot up

NEW DELHI:  Amid soaring steel prices, the government is mulling raising floor prices for iron ore and bringing in checks to see that high-grade iron ore which is banned from being exported are not being shipped. 

Nitin Gadkari, Shipping, ports and highways minister, among others has written to the Prime Minister pointing out that a 55 per cent surge in steel prices has raised project costs. Steel makers were forced to raise prices four times during the October- December quarter.

Companies involved in making steel point out that the domestic iron ore prices have increased by 120 per cent and are now averaging about Rs 8,000 per tonne, causing them severe cost escalation. State-run miner NMDC has increased prices of iron ore twice last month. 

Officials held inter-ministry consultations on ways to cool down both iron ore and steel prices as the Commerce Ministry officials said they were in talks with the steel ministry to try to work out a via media.

“Floor prices are being considered as also stricter checks to see that high grade iron ore is not being exported by mis-labelling them as fines as is being alleged,” said officials. Part of the reason for the surge in ore prices is because China has increased its offtake resulting in iron exports from India rising by 73 per cent in April-November as compared to the same period last year.

Analysts say China is stepping up investments in infrastructure projects to beat the pandemic-driven slowdown and has at the same time stopped importing ore from Australia in a bid to punish it and hence India has become its main source. Robust demand from China is driving up prices and “we can expect the shortage to remain into the next year,” said Saurabh Bhatnagar, Partner and National Leader, Metals & Mining, EY India.

Income of 3 lakh households affected

A study by the Indian Institute of Technology (IIT)-Indian School of Mines, Dhanbad has revealed the closure of the iron ore mining industry in Goa has impacted revenues worth over Rs 3,400 crore with household income level witnessing at least 50-30 per cent drop across talukas.

Mining in Goa came to a halt in March 2018 after the Supreme Court quashed the renewal of 88 mining leases. Post-closure, savings of three lakh households depended on mining in Goa have fallen drastically, It has also resulted in loss of lakhs of direct and indirect employment.