India: JSW Steel plans to surrender Jajang iron ore mine again citing uneconomic conditions
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JSW Steel has said that it will be surrendering the Jajang iron ore block in Odisha. The steelmaker, also India's fifth largest Indian iron ore producer , in a statement to the stock exchange explained that operating the mine at a premium of 110% is uneconomical.
Interestingly, JSW steel has also been exporting low grade ore from Odisha through the last year. In financial year 2024 (FY'24), the company exported 3.27 million tonnes (mnt) from the state, making it India's fourth largest exporter.
Following global iron ore price drop and rise in inventories at Chinese ports, Indian iron ore export prices have fallen. BigMint's index for Indian origin fines Fe 57% has dropped from $85/t CFR China in end May to $70/t in August, which could be the reason behind JSW's unviable exports. This is why, it is surrendering the mine.
JSW Steel had bid aggressively bagging four mines in Odisha, in the early auctions of iron ore mines under a new mining act. Its high premiums, it had hoped would pay off, insulating it from the high prices of merchant miners. The steelmaker, which has mines in Karnataka though was banking on more ore supply flooding the market, with more auctions, and certain other policy changes that haven't happened. Of the 27 mnt of iron ore the steel maker produced last year, against total requirement of 49 mnt, 19 mnt were produced from its Odisha mines.
JSW Steel's iron ore sourcing
This is not the first time the steel maker is offering to surrender Jajang. Prior to this, the company had announced surrendering the Jajang mine in September, 2023 and then withdrew the notice later in November, 2023. It has later changed its mind, and actually increased production from the same, and set up downstream processing units. In addition, in August 2021 they planned to surrender Gonua iron ore mine, but later retained it.
In its statement to the stock exchange, JSW Steel said: "The proposed surrender of the aforesaid mining lease is subject to requisite approvals."
