India's third-largest steel producer, is not planning to resume operations at its iron ore mines in Chile unless the global price recovers to $75 a tonne, a senior official said on Thursday.
JSW, India's biggest importer of iron ore, is looking at buying around 6 million tonnes of the steelmaking raw material in the current year to next March after importing about 9.5 million tonnes in the previous financial year, said Arun Maheshwari, senior vice-president at the company.
JSW said in March it would temporarily shut down operations at its mines in the Atacama region of Chile due to low global prices. It has a 70 percent stake in Santa Fe Mining, which has rights to the iron ore deposits.
"We have suspended operations and we're looking at other things, how we can cut down the cost, and (when) the market improves we can restart. Probably around $75 it will make sense," Maheshwari told Reuters on the sidelines of an industry conference.
Iron ore hit a 10-year low of $46.70 a tonne in April amid a glut stoked by big, low-cost producers in Australia and Brazil. That has forced higher-cost suppliers out of the market.
The price has since recovered to above $60, but it is still down more than 50 percent from the start of last year.
A scarcity of available iron ore in India due to policy curbs has forced many steel mills to import ore, lifting the country's imports of the raw material to a record 15.5 million tonnes in the year to March.
"This (financial) year we expect to (import) close to 6 million tonnes," said Maheshwari. That would be down from around 9.5 million tonnes in the past financial year as domestic supply improves, he said.
The Chilean mines can produce about 1 million tonnes of iron ore, he said.
JSW, controlled by billionaire Sajjan Jindal, is on track to boost annual steel output to 40 million tonnes by 2025, said Maheshwari, from a current capacity of 14.3 million.
But Maheshwari doubts whether a government target for India to increase annual production to 250 million tonnes by that year is achievable.
"Basic demand is not there in India. The growth that we're expecting is not visible as of today," he said. "Most realistically, it may be 160 million tonnes."
India is the world's No. 4 steel producer with output of 83.2 million tonnes in 2014, according to the World Steel Association.
Because of a surge in steel imports, including from China, Indian steelmakers "have no choice but to cut down production", he said.
Source: Reuters
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