New Delhi: India’s iron ore shipments have fallen by up to 20% in the past month following imposition of 15% export duty and higher freight charges, the mining industry said on 7 August.
“Iron ore exports have become unviable for Indian miners due to the 15% ad-valorem export duty, increase in freight charges and decline in prices of the ore in global market,” Federation of Indian Mineral Industries (FIMI) president Rahul Baldota told reporters here.
Of over 200 million tonnes of total ore production, India exports about 100 million tonnes (of fines) while 85 million tonnes are consumed by the domestic steel industry.
Though Baldota did not say exactly how much the exports have fallen, he estimated the drop in the range of 15-20%.
According to FIMI, the apex body of Indian miners, rail freight for iron ore export has increased by almost 70% the last few months. The hike in freight charges is equivalent to around 15% of freight on board (FOB) realization of the ore, FIMI said
“In Karnataka alone, the number of railway indents requisitioned to ferry iron ore to ports have declined from 20,000 a few months back to about 1,000 now,” he said.
“After the recent hike in rail freight, movement of iron ore to ports is being done via road and exporters are cancelling the indents,” Baldota said.
Seeking roll back of export duty, imposed by the government on June 13 to increase availability of the raw material for the steel industry, the FIMI president said India could lose valuable foreign reserves of $10 billion if exports continued to be unviable.
On the hit on operating margins of the miners due to unviability of iron ore exports, Baldota said the margins have come down to 10-12% against 30-35% earlier.