@defabs has written quite extensively about the impending disruption to iron ore production in Odisha, India. Here is a very balanced take on the situation- with the indicators pointing to a fairly major challenge and a greater reliance on imported IO for the subcontinent in CY 2020..

India's iron ore demand may rise by 7-8pc/yr

Published date: 26 July 2019

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India's iron ore demand will increase by 7-8pc/yr over the next five years, in line with similar growth projections for crude steel output.

Demand will be at 194mn t in the April 2019-March 2020 fiscal year, 208mn t in 2020-21, 224mn t in 2021-22, 240mn t in 2022-23 and 257mn t in 2023-24, minister of mines Prahlad Joshi told parliament this week.

India's bureau of mines has not yet provided actual iron ore consumption for 2018-19. It was around 155mn t in 2017-18.

The production of iron ore is sufficient to meet current demand from the domestic steel industry, Joshi said.

India's iron ore output was at 206.40mn t in 2018-19, up by 2.73pc from 200.9mn t in 2017-18, according to the mines ministry. Among major producers, the eastern state of Odisha had an output of around 113mn t, followed by the central Indian state of Chhattisgarh at 35mn t, Karnataka at around 30mn t and Jharkhand at 23.43mn t.

There are concerns about iron ore output in the 2020-21 fiscal year as mining leases of most private-sector leaseholders will expire in the states of Odisha and Karnataka on 31 March 2020.

Federal law necessitates the auction of mining leases held by private merchant mining firms. No efforts have been made yet for such an auction, which takes several months to complete and is usually followed by several months of waiting for necessary regulatory clearances.

India's higher iron ore imports because of such a shortage could dent steelmakers' profit margins as domestic prices lag imported prices but support global iron ore prices.

But some steel industry executives such as JSW Steel commercial director Jayant Acharya think it will not make much of an impact as there are sufficient stocks at mine sites to meet the shortfall in production, while the government is likely to take measures to maintain production before the leases expire.

India's iron ore imports rose by 48.27pc to 12.9mn t in 2018-19 compared with 8.7mn t in 2017-18. JSW Steel has been buying large volumes of low-grade Australian fines since 2017-18 to reduce the levels of gangue and impurities in its furnace burden. But imports may slow this year, as prices of low-grade fines such as SSF fines have risen sharply amid robust demand in China.