Mine more or block off exports?

MUMBAI: Can iron ore reserves in India increase from the present 23bn tonnes? The question has become the focal point of the ongoing iron ore export debate between the mining and steel industries.

While the steel industry says more than half of these reserves are in ecologically-sensitive areas and not entirely recoverable and thus exports should be banned, the mining industry’s take is with better technology and more state investment, reserves can go up to 100bn tonnes. According to Indian Bureau of Mines, India has 23.59bn tonnes of iron ore reserves, of which only 6.9bn tonnes are proved.

“Moreover, a bulk of 10.6bn tonne of magnetite iron ore is found mainly in the Western Ghats. This is an ecologically-sensitive area and the Supreme Court has partly stopped mining in this area,” said a senior official of JSW Steel. Fearing environmental repercussions, the apex court had closed down mining at Karnataka’s Kudremukh region, known for its natural beauty.

The steel lobby contends that at the current growth in steel production and iron ore export, the iron ore reserves will be exhausted in 20 years, a far cry from their mining counterpart’s contention that the stock will last at least 100 years. “From the present production of about 45 million tonne per year, we will cross the 200m-tonne mark by ’20. Even China, with a CAGR of 10.5% grew from 46m tonnes in 1984 to 350m tonnes in ’04,” said an industry source.

But doubts have already been raised on the claims made. “Most of the expansions are still in paper. There has hardly been any progress even in one of the hundreds of MoUs signed in the past two years,” alleged a mining company official. More importantly, the mining industry is batting for a higher investment. “While India spent $5m in mining (including coal and other minerals), Australia invested almost $500m last year.

Even smaller countries like Peru and Chile invest more in exploration and mining than India,” said a top official of a mining firm. Little wonder then, said officials, albeit the immense minerals deposits, the country does not have a mining company of global standards. “The state-run NMDC, India’s largest iron ore producer and exporter, is the only company worth mentioning,” added another mining official. NMDC last year produced almost 21m tonnes of iron ore.

The official suggested that opening up the sector would not only increase production but also bring in better technology, facilitating deeper exploration. “In other countries, exploration is done in depths exceeding 200 metres below sea level, but in India the average depth is 60 metres,” said an industry analyst.

The much-debated Hoda report mentions that Australian iron ore reserves, helped by increased investment in exploration, have gone up from 400m tonnes to 40bn tonne in 40 years.

But all that is recovered is not suited for use. “For instance, the total reserve base of crude iron ore in the world is placed at 370bn tonnes. But by iron content, this reserve comes down to 180bn tonnes,” said a steel company official. “If Australia is exporting iron ore now, it’s only because it has discovered more reserves. Let’s also do the same. The government should look into this,” suggested another.