Structure of the Iron Ore Markets in India

Posted on December 23, 2011 by

Haematite - Iron ore Steel mainly require iron ore as the raw material.  India is the world’s largest producer of iron ore. India has ready domestic availability of significant reserves of high quality iron ore predominantly in the east of India.  The state of Orissa alone has 25% of India’s iron ore reserves. Total iron ore reserve as per United Nations Framework Classification (UNFC – 1/4/2005) is 1.46 thousand cr (Haematite) and 1.06 thousand cr (Magnetite) tons with 104 years of life index. NMDC alone sold 16.33 million tonne of Iron Ore in domestic market during 2010-11

Initially, iron ore mining was confined to few players in India. Tata Steel and SAIL got into steel production based on iron ore mines leased out to them on a captive basis. Other than them, the country had steel production only from scrap based units. No other players were granted for the mining activity.

Structure of the Iron Ore Market in India;

From the supply side, today, the iron ore market is divided into the following segments:

  1. Merchant mining companies in the public sector such as NMDC, OMC OMDC etc. These companies sell iron ore either at market based or government determined prices.
  2. Merchant mining companies in the private sector who sell iron ore at market based prices
  3. Steel producers’ captive mines.

From the demand side of the market, the market is segmented in the following way:

  1. Iron and steel companies making use of their own captive resources mined directly or indirectly at the actual cost of mining (plus freight)
  2. Iron and steel companies obtaining assured allocations from NMDC or any other government company at prices fixed by the concerned iron ore company with or without the government clearance/approval.
  3. Iron and steel companies buying partly or fully their requirement from the merchant mining companies/traders at market prices.

Presently following companies (Government and Private) are involved in the iron ore mining in India.

Sr. No Name of the Mine Owned by
1 Bailadila Mines NMDC Limited
2 Costi & Tundu (Chowgule Group Mining) Chowgule and Company Private Limited
3 Dempo Mines Sesa Goa Limited, and Vedanta Resources PLC
4 Donimalai NMDC Limited
5 Essar Steel (Hy-Grade Pellets Ltd) (Private), and Essar Global Limited
6 Gandhamardan / Malantoli (Rio JV) Orissa Mining Corporation Ltd, and Rio Tinto Group
7 Goa (Sesa Goa) Mitsui & Co Ltd, Sesa Goa Limited, and Vedanta Resources PLC
8 JSW Steel (Vijayanagar Work) Jindal South West Holdings Limited
9 Karnataka (Kudremukh) Kudremukh Iron Ore Co Ltd
10 Karnataka (Sesa Goa) Mitsui & Co Ltd, Sesa Goa Limited, and Vedanta Resources PLC
11 Mesco Steel Iron Ore Mines Mideast Integrated Steel Ltd.
12 Mineral Enterprises (MEL) Mineral Enterprises Limited
13 Orissa (Sesa Goa) Mitsui & Co Ltd, Sesa Goa Limited, and Vedanta Resources PLC
14 Orissa Mines Orissa Mining Corporation Ltd
15 SAIL Iron Ore Mines Steel Authority of India Limited
16 Salgaocar Mining (Goa) Salgaocar Mining Industries Pvt. Ltd
17 Tensa Iron Ore Mines (TRB) (JSW) Jindal South West Holdings Limited
18 Tungabhadra Minerals (Salgaocar Group) Mysore Minerals Limited, and Salgaocar Mining Industries Pvt. Ltd

Reference : Ministry of steel, Government of India  and respective iron ore miners website.

Image Credits: Wikipedia

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