Business Standard

India's iron ore exports may decline 72% this year

Related News

Iron ore exports from India are likely to decline 72 per cent this year, thanks to a number of measures adopted by the government to preserve the key natural resource for domestic use.

Investment bank forecasts India’s iron ore exports to remain at 17.3 million tonnes for financial year ended March 31, 2013, down sharply from 61.8 million tonnes in the previous year and an even sharper 120 million tonnes in 2009-10.

Data compiled by apex industry body, the Federation of Indian Mineral Industries (FIMI), showed total iron ore exports at 15 million tonnes in the first eight months of the current financial year, compared with 36 million tonnes in the previous year. This is a decline of 62.3 per cent.

R K Sharma, secretary general of FIMI, attributed the decline to poor mining activity resulting in lower availability of the mineral coupled with the hefty export duty levied by the government in order to discourage exports.

“The export duty of 30 per cent on iron ore fines is a deterrent to the effective functioning of the Indian mining industry. During our recent interaction with the ministry of finance, we requested the government to reduce export duty on iron ore fines in Budget 2013-14 to five per cent,” said Sharma.

In FY10, the ministry of finance had imposed five per cent duty on the export of iron ore fines. This was raised to 20 per cent in FY11 and 30 per cent in FY12. Between February 2010 and March 2012, the railways increased freight nine times. Today, it is about four times the domestic freight for iron ore (Rs 2,600 a tonne). says as a result of these factors, iron ore exports have turned unviable.

Also, the government suddenly woke up to preserve the national resource for use in the domestic market. This led to the tracking of illegal miners and exporters in the three leading producing states — Karnataka, Goa and Odisha. While mining activity in Karnataka came to a standstill two years ago following the Supreme Court order to crack the whip on illegal mining, cancellation of environment clearance and non-renewal of the expired ones prevented mining in over 100 mines in Goa, which contributed around 50 per cent of iron ore exports in 2009-10. The Supreme Court-appointed recommended stay on mining in a number of mines in Odisha resulting in lower domestic production and exports.

OreTeam Exim, a Delhi-based research firm, forecasts India’s iron ore exports at 18 million tonnes in 2012-13 due to various issues surrounding mining and trading activities for the last two years in Karnataka, Odisha, Chhattisgarh and Goa, which squeezed exports, virtually killing the business of 90 per cent of the trading community who were relying on exports.

Looking ahead, global miners and experts say 2013 could be the penultimate year for iron ore exports to see average price levels of $140 per tonne CFR. In the next two years, it could slip to $120 a tonne CFR China as supply overtakes demand creating a lull in prices. On the other hand, for Indian traders and miners, the export market would be favourable only if the levels are above $130 a tonne CFR. Hence, beyond 2013-14, there is a huge possibility that the iron ore market could head downwards in terms of spot market prices, virtually closing the doors for Indian suppliers (if freight and export duty remain unchanged), said an analyst at OreTeam.

Read more on:   

Read More

Copper slips to 3-week low

London copper drifted to a three-week low today as unease over China’s limp return to the market from a week-long break weighed on prices, although ...

Quick Links


Market News

Investor awareness drives must focus on quality: Sebi chief

U K Sinha says 'just completing' numbers not good enough to address needs of investors

Gold edges up on improved demand amid overseas support

Standard gold adds Rs 30 to end at Rs 26,405 per 10 grams, silver adds Rs 200 to Rs 37,160 per kg

Kotak-ING Vysya merger: Old pvt banks get thumbs up

Many were up between 3-6%, even as an index tracking banking sector hit an all-time high

Sebi rebukes HSBC Securities, India Star in Global Offshore case

Securites and Exchange Board of India (Sebi) on Friday 'reprimanded' HSBC Securities and Capital Markets Pvt Ltd for failing to make adequate ...

YES surges 4% as RBI allows FIIs to buy equity

Shares of YES Bank rose about four per cent on Friday, adding Rs 1,167.16 crore to its market valuation, after the Reserve Bank said FIIs can ...

Back to Top