Dec 17, 2014 00:38 GMT   Source: Reuters

Tue, 16 Dec 11:04:00 GMT


By Krishna N. Das

NEW DELHI, Dec 16 (Reuters) – India’s Tata Steel may be allowed to resume production from its biggest iron ore mine this month, a government official said, ending a stoppage of over three months that has forced the firm to import the raw material for the first time ever.

India was earlier the third-largest supplier of iron ore in the world, but court restrictions over the past three years to curb illegal mining have prompted companies such as Tata Steel and JSW Steel to turn to imports.

A restart of production at Tata Steel’s Noamundi mine should help India’s top steel company lower its reliance on overseas purchases of the steelmaking raw material.

The eastern state of Jharkhand, where Tata Steel started mining from the Noamundi mine in 1922, asked the company to stop operations in September pending a renewal of its lease.

But last week a local court asked the state to issue

“express orders” by Thursday to allow the firm to resume output from the mine, which has a capacity of 10 million tonnes a year.

While the state government was unlikely to be able to issue the orders so quickly, “mining will resume automatically” after the court-set deadline, S.I. Minz, additional director of mines in Jharkhand, said on Tuesday.

Another official in Jharkhand said the state was yet to decide on the order.

Delays in renewing mining leases in Jharkhand and neighbouring Odisha have forced Tata Steel to resort to iron ore imports for the first time in its 107 years.

It has bought 3 million tonnes of iron ore this fiscal year that began in March, mostly from overseas and from India’s top producer NMDC .

Future imports will depend on the restart of Noamundi and other mines, spokesman Chanakya Chaudhary said.

But transportation costs are a concern for the company. Unlike in countries like Japan, most steel plants in India are located in the resources heartland and away from the coasts.

“There has been an issue of logistics to bring the iron ore from the ports and other parts of the country to Jamshedpur

(plant),” Chaudhary said.
(Editing by Himani Sarkar)