In order to prevent shortages of the primary raw material in the second-largest crude steel manufacturer in the world, Indian producers of sponge iron have petitioned the government to impose levies on shipments of low-grade iron ore.
Approximately 336 sponge iron facilities are dispersed throughout India, the nation that produces the most sponge iron globally. About 50 million metric tons of sponge iron are produced in India; secondary steel makers mostly use this raw material.
India’s iron ore exports increased from 9.5 million metric tons to 32.2 million metric tons (worth $2.7 billion) in the first nine months of the current fiscal year, which started in April 2023. China is a neighbour of India and receives more than 90% of its total iron ore exports.
Manufacturers of sponge iron have expressed dissatisfaction over growing costs and diminishing supply of the essential element in the production of sponge iron, amidst the upsurge in iron ore exports from India.
The recent spike in iron ore exports has made the shortages worse. Since the government reversed its May 2022 decision and eliminated the higher export tax on low-grade iron ore lumps, fines, and pellets in November 2022, sponge iron companies have expressed supply concerns.
An industry group representing mining businesses, the Federation of Indian Mineral Industries (FIMI), has requested that the government refrain from limiting exports of iron ore. According to FIMI, India exclusively exports low-grade iron ore, which is not extensively used domestically.
In the fiscal year ending in April 2024, 51 million metric tons of sponge iron are anticipated to be produced in India. India’s sponge iron producers are predicted to require more iron ore, as seen by the projected 15% growth in sponge iron output in 2024–2025.