Firms seek to sell ore at global prices

The slug-fest on iron ore exports intensified today with ore exporters daring domestic steel companies to absorb the entire production at the international price as a way out to limit overseas sale of the mineral.

"We are per se not all that eager to export ore provided we get the same price as is available in the export market," R K Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI), the apex body of ore producers, said.

Sharma said ore producers were willing to supply to the domestic steel industry iron ore at spot FOB price, provided they under-write the entire production of ore in the country.

"Let the steel industry come forward and give a declaration in writing before the government. We are willing to cooperate to the maximum extent with the steel industry," he said.

Steel firms have been arguing that iron ore, the key input for producing steel, should not be exported, but ore producers say they get a better price overseas. Exporters also contend that Indian steel companies do not have the technology to use ore fines and mainly lumps are used to make the alloy.

In a bid to discourage exports, the government imposed a duty of Rs 300 per tonne on ore export from March 1, a move that was hailed by steel firms but decried by ore producers.

India has 23 billion tonnes of iron ore reserves and exported about 90 million tonnes last year.

Sharma also sought to allay apprehensions that unabated exports of iron ore could jeopardise the future of Indian steel industry, which aims to nearly double production to 80 million tonne by 2012.

"FIMI is basically concerned to get the best price, whether in domestic or export market. We are willing to supply iron ore to domestic steel industry at spot FOB price minus logistics like railway freight and port charges," Sharma said.

He claimed that exports have fallen by about 33 per cent since the export duty of Rs 300 a tonne was levied.

Ore exports are estimated to be slightly over 7 million tonnes in March 2007 as against 10.5 MT in March last year.

However, the Indian Steel Alliance (ISA) repesenting major steel producers had earlier countered this claim, saying exports have actually increased.

ISA chief Moosa Raza has also argued that the capacity expansions announced by steel companies were based on increased usage of ore fines and unless exports were tapered off within the next five years, both greenfield and brownfield expansions would not fructify.

Sharma also said the steel industry was not showing any concern for the iron ore sector despite the fact that they were depended on it for survival and growth.

"All iron ore produced goes in steel making all over the world and therefore it is strange that an industry which depends on iron ore as basic raw material should cry against that very industry," he said.

According to FIMI estimates, miners would lose about Rs 3,000 crores due to the duty while the government would lose about Rs 5,000 crores in railway freight and port charges.