June 19 (Bloomberg) -- JSW Steel Ltd., the Indian steelmaker that purchases all its iron ore, will import the raw material in bulk for the first time as local supplies remain scarce and global prices hover near a 21-month low.
The nation’s third-biggest steelmaker plans to buy as much as 6 million metric tons, or about a quarter of its needs, in the year ending March 31 from overseas, compared with a “few thousand tons” last year, Group Chief Financial Officer Seshagiri Rao said in an interview. Suppliers in Canada and South Africa have been contracted and talks are on with vendors in Australia, he said.
JSW, which depends on external iron ore sources to feed its 14.3 million ton capacity, has faced raw material shortages since 2011 when successive mining bans in the top producing states of Karnataka, Goa and Odisha slashed local supplies. While restrictions have been lifted in two states, output has yet to pick up.
“Iron ore availability in India is worsening,” said Rao, who is also JSW’s joint managing director. “There’s not much price difference between local and imported ore now as the international rates have fallen.”
Ore with 62 percent iron content at China’s Tianjin port, a benchmark, has fallen 33 percent this year to $90.30 a dry ton, according to data compiled by The Steel Index Ltd.
The shares of Mumbai-based JSW, controlled by the billionaire Jindal family, rose as much as 1.8 percent to 1,254.90 rupees and traded at 1,234 rupees as of 12:32 p.m. local time. The key S&P BSE Sensitive Index fell 0.4 percent.
Mining has yet to start in any of the quarries in the western state of Goa more than two months after the Supreme Court allowed resumption. In the eastern Odisha state, the court had halted 26 mines, pending renewal of leases. Only some these mines have restarted, Rao said.
Mines in the southern state of Karnataka, where JSW’s biggest factory is located, had restarted with a lower capacity in February last year.
The curbs will probably cut the country’s iron ore output to about 130 million tons, the lowest in more than a decade, in the year ending March 31, while imports may jump to 15 million tons, Rao said.
In the next quarter, JSW plans to restart two of its seven shuttered coking coal mines in the U.S. that it had bought in 2010 for about $100 million, Rao said. The company will start with a monthly output of about 25,000 tons and increase it to 1 million tons once it secures leases for the remaining mines.
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