Iron ore exports from Odisha, the largest producing state in the country dipped by 46 per cent in 2011-12 to 12.96 million tonnes (mnt) as against 24.12 mnt in the year-ago fiscal as high export duty of 30 per cent imposed by Centre dragged exports to China, the single largest market for exporters from the state.
On a pan-India basis, iron ore exports dropped nearly 40 percent in 2011-12 to 60 mnt from 98 mnt in the previous year. The state’s share as percentage of total iron ore exports from the country also declined from 25.5 per cent in 2010-11 to 21.6 per cent in 2011-12.
The steep export duty has rendered the bulk mineral ore uncompetitive in the export market, especially China where Indian shipment plummeted from 89.72 mnt in 2010-11 to 52.47 mnt in 2011-12 (up to February 2012).
India had raised export duty on iron ore from 20 per cent to 30 per cent to discourage exports as it looks to conserve supplies for its own steel making industry. China which procured 15 per cent of its iron ore from India in 2010-11 was looking at alternatives as ore exports from the country had slumped following export duty hike.
Besides the steep duty hike that has been a dampener, exporters in the state were also sore over slackening demand for the ore in the Chinese market.
“Exports of iron ore have become non-remunerative especially post introduction of the 30 per cent export duty. What has added to our owes is China which is our biggest buyer of lump ore and fines has been lately growing at a slow pace, impairing demand and cooling ore prices to $140 (around Rs 8,000) per tonne. This together with rail freight charge of Rs 2,600 per tonne of iron ore meant for exports and other charges including royalty, port handling charges and local transportation cost have hit the exporters hard,” said a leading iron ore exporter from the state on condition of anonymity
“China’s decelerating economy has led to a situation where iron ore fines in the state are getting stacked. Though there is talk of beneficiation and pelletisation, we lack the right technologies for processing low grade ore,” he added.
Iron ore in lump form, predominantly exported to China from the state were valued at Rs 70.71 crore in 2010-11. Fines, shipped to China and Hong Kong, were valued at Rs 8,114.28 crore in the same fiscal, according to latest export data available at the directorate of export promotion & marketing.
It may be noted that iron ore export traffic slumped sharply from the 6-7 ports that ship the ore from Odisha. Exports of ore from the Paradip port almost halved from 13.54 mnt in 2010-11 to 6.80 mnt in 201-12. Iron ore shipments from Vishakhapatnam also nosedived 282.90 per cent from 1.18 mnt to 0.31 mnt in the stated period.
The downtrend in export traffic was also seen in the ports of Kolkata, Haldia, Gangavaram and Kakinada.
Mineral exports, including iron ore lump, fines, chrome ore, chrome ore concentrates and ilmenite account for nearly 60 per cent of Odisha's overall exports.
Despite being the biggest iron ore producer and endowed with the highest chromite deposits (about 97 per cent), Odisha has been clamouring for ban on exports of both the ores to secure raw material supplies for local industries.