India may face iron ore shortage in 2020


India may face a significant shortage of iron ore in 2020 as private-sector merchant mining leases expire as the mining leases, which are due to expire on 31 March 2020, cannot be automatically renewed and instead have to be put up for auction and granted new environmental clearances and this process typically takes up to 3-4 years to complete. However, estimates of the likely impact on production vary (50 million tonnes per year Dr AS Firoz; 80 million tonnes per year Crisil). Both estimates account for a sizeable chunk of India’s iron ore production, which totalled 210 million tonnes in the financial year that ended 31 March 2018.

Government officials said they are confident the process of holding fresh auctions and securing environmental clearances will be handled expeditiously to ensure sufficient supplies are available for domestic steelmakers. Bipul Pathak, joint secretary at the ministry of mines, said “The ministry of mines is monitoring the situation closely. We will ensure that there is no disruption to mining. All the mines will go for fresh auction and we will co-ordinate closely with the ministry of environment for faster clearance.”

The Indian government has set a deadline of 1 April 2019 for states to start the auction process, although the deadline is not binding. But general elections are due in April and May, so state governments may be focused on more politically-sensitive projects. Most of the leases that are due to expire are in the largest producing state of Odisha, followed by Goa and Karnataka.


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