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Import of iron ore is on the rise due to falling domestic supply

Faced with dwindling supplies and a country-wide clampdown on ore production due to illegal mining, steel companies are doing the unthinkable - importing iron ore to feed their plants. The imports, a trickle now, but which experts warn could easily turn into a torrent, threaten to increase India's dependence on overseas supplies of crucial mineral resources it owns in abundance.

Like coal, which is imported in vast quantities by power companies, the slow rise in imports of iron ore could erode the competitiveness of steel companies, and leave them at the mercy of wild swings in international prices and supply disruptions.

We are foreseeing a couple of years when India would be importing iron ore - it may not necessarily become a net importer though," said Prakash Duvvuri, senior analyst at Oreteam, a New Delhi-based mining consultancy firm.

Shipping industry and port officials in Paradip say another 150,000 tonnes of ore imports are expected soon to feed the state's ravenous steel mills. They, however, couldn't confirm the name of the buyer.

Bhushan Power & Steel, run by Sanjay Singhal, elder brother of Neeraj Singhal, who runs Bhushan Steel, has also been importing pellets from Bahrain and Ukraine. The unlisted firm is building a 2.3-million-tonne steel plant in Odisha. "The shortage of iron ore supplies in Odisha has forced us to import," rues Singhal.

Essar Steel, another steelmaker feeling the brunt of an acute shortage of the critical ferrous input, has been importing ore for the past few months, but on the western coast.

South African and Bahrain ores have been used to feed the company's facility at Hazira in Gujarat. "We have been importing iron ore for the past couple of months, but will be stopping now.

he depreciation of the rupee no longer makes it viable, although international iron ore prices are coming down," Essar Steel CEO Dilip Oomen said.

Essar's 8-million-tonne pellet plant in Visakhapatnam was fed by a slurry pipeline from NMDC's Chhattisgarh mine. That has run dry after being damaged in a Naxal attack last October, and some iron ore is now being supplied through rakes.