The 1.6-lakh tonne iron ore that Esaar Steel plans to purchase from Australia’s Rio Tinto will be bought for $95 per tonne, a senior Essar Steel official told FE. This is the first time that the Australian mining giant is selling iron ore to India.
Essar Steel CEO Malay Mukherjee said, “The deal was concluded at $95 per tonne of iron ore and deliveries are expected in mid-February.”
“We are trying out new ore as we are increasing the capacity of our blast furnace.” He added. Earlier, Essar Steel was using electric arc furnace (EAF) route, and later shifted to blast furnace route for its 8.3 lakh tonne per annum capacity addition at Hazira. Indian steel companies meet most of their iron ore requirements through purchase from the spot market. Iron ore prices in the spot market are currently about $60-65 per tonne. In 2008-2009, steel players sealed iron ore prices internationally at $75 a tonne. Last year, owing a fall in demand for steel, global iron ore prices dipped 20-25%, and correspondingly, NMDC, India’s single largest iron ore producer and exporter, supplied iron ore at a discount to the sealed price. India is the world’s biggest producer of iron ore and is also one of the biggest exporters, especially to China. The total iron ore reserves in India currently stand at 7.06 billion tonne, and iron ore resources are estimated to be around 25.25 billion tonne.
Apart from its expansion at Hazira, Essar Steel is going ahead with its $600 million, 6 mtpa pelletisation plant in Orissa and expects the plant to be operational by September next year.