Iron ore export slumps to multi-year low in April-June

Weak international demand and thin margin has hit iron ore exports from Odisha, the largest producer and second biggest iron ore exporting state in the country.

As per the data available with the state steel and mines department, in the first quarter of the current financial year, traders in Joda mining circle lifted 57 per cent less iron ore for export purpose compared with the year ago figure despite sharp rise in production.

During the same period, the Joda circle produced 14.2 million tonne iron ore, much higher than 8.19 million tonne in the comparable period of last year and granted export permission for 1.13 million tonne, close to the similar levels seen four-five years ago and less than half of 2.65 million tonne permitted for export in first quarter of 2011-12.

“The exports dropped due to poor international demand and higher prices. Higher export duty applied from December 2011 has also hit the exports,” said U C Jena, deputy director of mines, Joda mining circle.

With more than 40 million tonne annual output, Joda is the largest mining circle in terms of iron ore production in the country, accounting for a fourth of India’s total output. It contributes the most to the state exchequer in terms of mining revenue. In 2011-12, the circle contributed Rs 2,184 crore out of total collection of Rs 4,517 crore, mostly from iron ore and manganese mining operation.

For 2012-13, the state steel and mines department has capped the iron ore production for Joda mining circle at 40 million tonne. As a result, a maximum of 400 trucks can be allowed per day to carry material from this circle for export purpose.

Between April and June this year, iron ore exports from Paradip port slumped to about 10-year low of 372,000 tonne, the latest port data revealed.

Though Karnataka is yet to resume export operation, iron ore fines are currently being exported from Goa. Even if there is no export restriction in Odisha and Jharkhand, the miners in east India are finding it difficult to export the mineral citing lower profit margin.

In the first quarter of current financial year, exports from Murmugao port was hit by only 20 per cent, while there was a 86 per cent dip in iron ore export through Paradip.

“Goa miners have the advantage of port proximity which we do not have. Higher transportation cost, coupled with higher export duty has made it difficult to export. Nearly 44 million tonne fines are stacked at Barbil-Joda region,” an official of a large iron ore export company said.

Iron ore prices went up by more than seven per cent in March-April period on better international demand, but have been falling since reacting to higher export duty and slump in demand from biggest buyer China. It has shed more than 10 per cent since May to be quoted at $136 per tonne at Chinese ports.