Iron ore export to help railways

The recent Supreme Court order asking the Karnataka government to lift the ban on export of iron ore from the state has come as a major relief for the Indian Railways.

The ban, imposed by the state government last July, along with a similar ban by the Orissa government, had resulted in a loss of over Rs 2,500 crore for the cash-strapped national transporter in the last financial year owing to reduced loading of the commodity for export. “We have not been able to lift iron ore to desired levels for the past many months due to this ban. In fact, this was one of the main reasons why we have missed the last year’s freight loading target of over 944 million tonnes (mt) partially,” said a senior official from the rail ministry.

Indian Railways transported roughly 923 mt of freight in 2010-11. The loss of Rs 2,500 crore on account of the 13 mt dip in iron ore loading accounted for 30 per cent of the overall Rs 8,400-crore earnings from the transport of the commodity.

“With the ban being lifted after the SC order, we are hopeful of a boost of around Rs 2,000 crore in revenue next year. Iron ore is our main forte in commodity earnings. Even while preparing the Budget, we had anticipated a solution to the problem would come in 2011-12,” the official added. Among commodities, iron ore is the second-biggest revenue earner for railways after coal.

The rail ministry’s earnings from iron ore movement in 2010-11 at Rs 8,400 crore were a mere 1 per cent increase as compared to the earnings in 2009-10. However, in this year’s Budget, the ministry has projected an 8 per cent jump in earnings from iron ore loading at Rs 9,035 crore for 2011-12.

The Supreme Court order that came last week directed the Karnataka government to put in place the necessary infrastructure and new rules to enforce prevention of illegal mining and illegal transportation of iron ore.

The SC bench comprising justices R V Raveendran also asked the state government to consider the suggestions made by Karnataka Lokayukta in its report to curb illegal mining.

The state government has sought two weeks’ time to build the infrastructure to implement the rules. The court gave the government time till April 20. The ban will continue till then.

India is the third-largest exporter of iron ore in the world with average annual exports between 100 and 120 mt. Karnataka is a major producing state with average annual production exceeding 30 mt.

Last year’s ban had hit exports, which were recorded at 85.4 mt between April and February last financial year, down 18 per cent as compared to the corresponding period of the previous year, according to data from the Federation of Indian Mineral Industries (FIMI).