Output glut to spur exports of iron ore

India will continue to export iron ore as production outstripped domestic demand and future reserve accretion will suffice to meet projected demand and export obligation, Minister of State for Commerce and Industry Jairam Ramesh said today.

"The existing iron ore export policy regulates and promotes judicious use of iron ore for domestic purpose and export of surplus quantity. Production of iron ore is in excess of current domestic demand," he said replying to supplementaries during the Question Hour in Rajya

Sabha. In 2005-06, India produced 155 million tonne of iron ore. Exports were 89 million tonne and another 58 million tons were domestically consumed, leaving a surplus of 8 million tons.

"We cannot consume entire domestic production," he said adding exports will not happen at the expense of domestic industry. "Domestic manufacturers (of steel) will not be starved... Indian steel industry will have full access to domestic iron ore."

Of exports, 74 million tons are to China and only 7 per cent is on long term contract.

"With increased prospecting and exploration and new investment in mining, India's iron ore reserves will increase to comfortable levels to meet domestic requirement and export obligations," he said adding modest prospecting had seen iron ore reserve rise by 8 billion tons during past few years.

The minister said the production to export ratio for India was lower than iron ore rich nations like Australia and Brazil.

Six states - Orissa, Jharkhand, Chhattisgarh, Karnataka and Goa - were dependent on iron ore mining for development of backward areas and employment.

"84 per cent of exports are fine and concentrate which are environment hazards. We are not export lumps," he said.

Ramesh said Japanese Steel Mills has been committed a minimum export of 3.47 million tons and a maximum quantity of 6.75 million tons. Posco of South Korea has been committed a minimum of 0.80 million tons and a maximum of 1.60 million tons while Chinese Steel Mills has been committed a minimum of 2.50 million tons and a maximum of 3.10 million tons.