India's steel production should reach 50 MN Tons in 2007

India's steel production should reach 50mn tons in the fiscal year ending March 31, up from 45mn tons in the previous fiscal year, Steel Secretary R.S. Pandey said on Wednesday.

"We are hopeful that a growing domestic demand will help us achieve the target," Pandey told reporters at an industry conference in Kolkata. The Steel Secretary said that he expected iron ore output in 2006-07 to be 100mn tons. He did not give the comparable figure for the previous financial year, but said that output was 41mn tons in 2000-01.

India is likely to produce 165mn tons of iron ore in 2006-07 as against 155mn tons in the previous year, B. Ramesh Kumar, Chairman of the National Mineral Development Corp. (NMDC) said in February. Of this, exports will be 100mn tons, he said. Iron ore exports to China alone are estimated at about 75mn tons.

More than half of India's iron ore production is exported, with a major chunk of the shipments going to China, where it is sold in the spot market as it commands a premium over long-term contracts. India's total iron ore reserves are estimated at 22.10bn tons, half of which is haematite ore. But, India would need to boost iron ore output to 300mn tons per annum by 2020 to match the projected steel capacity of 180mn tons by that year.

Rahul N. Baldota, vice president of the Federation of Indian Mineral Industries recently warned that iron ore exports could halve in the next fiscal year (2007-08) because of the proposed export tax. Sinosteel Corp., China's No.2 iron-ore trader, stopped buying iron ore from India after the Government imposed a Rs300 per ton (US$7 a ton) tax on exports of the main steelmaking raw material. The tax makes Australian and Brazilian iron ore more competitive, Sinosteel said.