KOLKATA (miningweekly.com) - Stung by the crisis in iron-ore mining at home, the Indian Steel Ministry has initiated bilateral talks with Brazil in an effort to seek ore resources in the Amapá province for Indian companies.

Iron-ore miner, NMDC, steel producer Rashtriya Ispat Nigam Limited (RINL) and MOIL Limited (formerly Manganese Ore India Limited) have started the process of acquiring Brazilian iron-ore assets, an official in the Steel Ministry said.

“Government-to-government bilateral talks have started following the Steel Ministry secretary’s visit to Brazil, last November. Current talks revolve around seeking the Brazilian government’s facilitation in identifying operating iron-ore mines in which the Indian companies could participate as strategic investors,” the official said.

“In fact, in response to inputs provided by the Brazilian government, NMDC has identified two operating reserves in the Amapá province of Brazil and due diligence on them will commence shortly,” the official added.

The focus on Brazilian iron-ore reserves was linked to the Steel Ministry's goading of Indian steel producers to seek raw material assets overseas in the wake of a rising trend of raw material imports and increasing shortages of accessable privately mined iron-ore, the official said.

In the wake of a clampdown on illegal mining and a Supreme Court order closing down iron-ore mines across the provinces of Goa and Karnataka, Indian companies were forced to import nine-million tons of ore during April to October 2012, with imports expected to continue to rise owing to the fact that total production during 2012/13 was not forecast to exceed 72-million tons.

According to Steel Ministry officials, Indian steel producers would have faced the ironic situation of rising ore import dependency despite a domestic resource of 28.52-billion tons, with overseas asset acquisition becoming a medium-term imperative to maintain growth in steel production.

The officials cited the example of RINL, which despite being owned by the government and completing a $2.5-billion investment to ramp up steel making capacity to 6.3-million tons a year from three-million tons a year, had not been allocated iron-ore reserves for captive mining despite submitting several applications over the years.