Iron Ore Exports may Dip 32%.

Iron ore export from India is likely to decline 32 per cent this year, due to a number of tightening measures by various state governments, says an estimate by the Federation of Indian Mineral Industries (Fimi). It said export during the current financial year would plunge to 80 million tonnes (mt) as against 117 mt in the previous year.

Holding various state governments responsible for taking "uncalled for" measures, Fimi advisor S B S Chouhan said, "All actions are temporary, which will be revoked soon."

Two months after the Karnataka government ban on iron ore movement out of the state, the government of Goa started searching premises of mining companies on royalty evasion allegations. As a result, a majority of small mining firms there had either reduced movement of ore or halted work. Also, the government has started questioning miners thoroughly before issuing any transport permit.

Close to 45 per cent of India iron ore exports come from 103 operational mines in Goa. About 80 per cent of exports from India of iron ore comes from these two states. Almost 90 per cent of the total shipment to China is of low-grade iron (fines), not used in India because of the abundance of high-grade ore here. Also, the state, for the first time, has steadily started adhering to the Coastal Zone Regulation Act, which restricts mining.

Mining companies in Goa have also been affected by a lack of vessels for transporting the product. About half the 400-odd barges running between Goanese ports are currently on annual maintenance.

China resumes
However, the favourable development is that China has again started buying low-grade iron ore from India, after six months of suspension. Haresh Melwani, CEO of H L Nathurmal & Co, a Goa-based mining and exporting firm, cautioned that Chinese buying could be temporary, for stockpiling. The Chinese government is set to announce its next Five-Year Plan on November 12.

Experts believe emission targets may be made stringent, thereby reducing steel production and, so, ore buying. Goan mining companies depend largely on low-grade ore exports to Chinese mills.

As of now, China plans to produce 700 mt of steel next year, compared to 600 mt during the current year and 534 mt in the previous year. As a rule, 1.3 tonnes of high-grade ore is required to produce a tonne of steel. The requirement for the low-grade variety would be higher.

"The infrastructure deficiency is gradually being overcome now, with road-building to nearby ports," said Glenn Kalavampara, secretary, Goa Mineral Ore Exporters Association.

As a result of the Chinese demand revival, prices of low-grade ore have risen sharply in one month, with fines of 58 per cent iron content being quoted at $100 a tonne, up from $80 per tonne, and the 54 per cent iron grade is up from $54 a tonne to $60 a tonne.

Source : sify.com