The Indian Express reported that the Indian government is likely to consider a proposal to curb iron ore exports by NMDC Limited to Japan and South Korea for the next 3 years in view of the ongoing scarcity of iron ore in domestic market forcing many sponge iron makers to cut down their capacities utilization.

Acting on a proposal of industry body ASSOCHAM, the commerce ministry has convened a meeting of an inter ministerial group comprising top officials of steel and mines ministries and representatives of industry on June 5th, to deliberate at length on a proposal to stop the country’s biggest miner, NMDC, from exporting 2.5 million tonne iron ore to these 2 nations.

It is learnt that the commerce ministry too agrees to the contention of ASSOCHAM that ore exports cannot be allowed at the cost of the raw material security of domestic integrated steel makers and sponge iron producers. A senior commerce ministry official said that “The existing foreign trade policy recognises that the demand of iron ore by domestic steel industry has to be met first and any surplus left thereafter may be exported.”

ASSOCHAM has argued that iron ore output has been adversely-affected since the mining ban imposed in Karnataka by the Supreme Court in 2011. Subsequently, the Orissa government also took several measures to control alleged illegal mining, which has also lessened the mineral’s output. It cited that ore production has drastically come down to 136 million tonne in FY14 against an output of 218 million tonne in 2009-10. This is likely to further slide to 100 million tonne in 2014-15.

As per ASSOCHAM. this paucity of the key steel making input has forced sponge iron units and steel plants to reduce their capacity utilisation, which has come down to 81% in 2012-13 against 88% in 2010-11.

ASSOCHAM has contended that at a juncture when the Indian steel companies are struggling due to paucity of iron ore, it is the moral duty of NMDC to support the industry.