Iron ore exports may drop further as Goa govt bans mining

The suspension of Environment Clearance by MoEF has added to the woes of Goan miners

The recent ban on mining imposed by Goa government and subsequently suspension of environment clearances (EC) of all the 93 mining leases in Goa by the Ministry of Environment and Forests (MoEF) is likely to adversely impact iron ore exports from India during the current fiscal.

The MoEF on Wednesday suspended environment clearances of Goan miners stating that the government of Goa had presented wrong facts for their clearance. Now, the miners will have to apply for fresh EC approval before starting their operations.

India's exports of iron have already been impacted severely due to differential freight charged by the Indian Railways and ongoing ban on mining in Karnataka. Already, there are no exports from the eastern states like Odisha, Chhattisgarh and Jharkhand this year.

"Goa was our only hope this year as it had no big cost on transporting iron ore from mine heads to the port. The ban on mining in Goa and cancellation of EC by MoEF will put the exports on the backburner. If the miners in Goa fail to get MoEF clearance within a month or two, then the exports will come down to a record low from India," R K Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI) said.

For FY13, FIMI had pegged iron ore exports to drop sharply by 62% to about 45 million tonne as against an all time high of 117 million tonne in FY11. In FY12, India exported 61.8 million tonne of iron ore, showing a decline of 36.7% over the previous year.

For the first quarter ended June 2012, iron ore exports have declined by 45% at 11.9 million metric tonne compared to 21.6 million metric tonne in the corresponding quarter last year.

"During the monsoon months, iron ore fines are not produced and exported in big quantity. The period between October and March is the busy season for iron ore exporters. With the suspension of mining and EC of Goan miners, there cannot be more than 2-3 million tonne of exports during the busy season from Goa. Overall, our exports are likely to drop to an all-time low during the current year," Basant Poddar, vice chairman, FIMI-South said.

The railways are charging around Rs 700 per tonne as freight for movement of iron ore to domestic consumption, while it charges Rs 2,800 per tonne meant for exports. This differential tariff has discouraged miners from exporting their iron ore, Sharma said.

The ban on exports imposed by Karnataka since July 2010 has already contributed significantly to the drop in exports of iron ore. Orissa’s exports have come down mainly due to differential railway freight rates.