Logistics woes drive Indian steel mills to buy iron ore overseas

Steel mills in India are increasingly tapping the global market for iron ore as they find it difficult to transport the key raw material from local mines, and demand for the metal surges in response to the government’s ambitious plans to build out the nation’s infrastructure. “Today, India is a net importer of iron ore,” as producers along the coast buy from overseas because they face domestic logistics challenges, mainly as a result of an overloaded railway system, Tuhin Mukherjee, managing director of Essel Mining & Industries Ltd., said in an interview in New Delhi. Freight and passenger trains in Asia’s third-largest economy jostle for space on the same tracks, and goods carriers often have to make way for passenger traffic, prolonging turnaround time for wagons hauling commodities. More supplies of iron ore will be required as the South Asian nation is set to overtake Japan as the world’s second-biggest steel producer this year. More demand from India for imports will help global mining companies. Fortescue Metals Group Ltd. doubled sales outside China to 8 percent in the year through June, and has experienced strong growth in cargoes to India, Chief Executive Officer Elizabeth Gaines said in an interview in August.