JSW Steel plans to significantly increase imports of iron ore due to lack of raw materials in the country

JSW Steel, the largest steelmaker, imported its first shipment of iron ore from South Africa last week. Amid a shortage of iron ore in India's domestic market, the company decided to import about 6 million tonnes of iron ore from overseas markets in the current fiscal year.

The company says these imported raw materials are needed to supplement the supply of iron ore in the local market due to a significant decline in local production, as well as restrictions on the processing of iron ore from one state to another.

For the current fiscal year, capacity utilization was 77 percent, a sharp drop from 88 percent in fiscal 2011. The country's iron ore production fell from 218 million tonnes in fiscal 2010 to about 144 million tonnes planned for 2014. The company expects iron ore production to continue to decline in the next fiscal year to 100 million tonnes, well below current demand.

A JSW Steel spokesman said the recent closure of mines in Odisha and delays in the start-up of mines in Karnataka and Goa have created an acute shortage of iron ore in the country. He added that the company has decided to import half a million tonnes of high quality iron ore every month to balance capacity utilization at a favorable level.

In addition, experts believe that rising iron ore prices in India due to shortages is a serious issue at a time when world iron ore prices have fallen by more than thirty percent over the past 12 months and there is a global surplus of iron ore.