Iron ore exports seen falling 35% in FY12

Iron ore exports seen falling 35% in FY12

Mumbai: Iron ore exports from India, the world’s third-largest exporter, are likely to fall 35 % to about 58 million tonnes in the next fiscal year, weighed by curbs and a four-fold rise in export tax, a trade body official said.

“Exports will definitely come down," R.K. Sharma, secretary-general at the 200-member Federation of Indian Mineral Industries (FIMI) said on Monday.

He expects iron ore exports to fall to 90 million tonnes in the current fiscal year ending March, from 91.7 million tonnes a year earlier.

The union government raised export duty and railway freight rates on the steel-making ingredient in a bid to increase the availability of iron ore for local firms including Tata Steel, JSW Steel and Essar Steel.

The move had made Indian iron ore expensive by about $20 per tonne, compared with Australian and Brazilian ores.

“It’s getting unviable to export iron ore from here (India). There will be a corresponding fall in production, if exports fall over a long time period," Sharma said.

Exports of iron ore, which is banned by southern Karnataka, is currently being appealed in the Supreme Court. Central state of Chhattisgarh and eastern Orissa are also seeking a ban such exports, of which buyers include Sinosteel, Baoshan Iron & Steel, and Nippon Steel.

Earlier, the trade body had proposed a rollback on iron ore export duty, which it said could result in unemployment in mining areas and loss of revenue for the government.

“We are pursuing the matter with the government, we are hopeful of hearing from them," Sharma said.

India’s 2.5 million tonnes of iron ore pellets exports, however, could rise as more exporters ramp-up production capacity, Sharma said. Large pellets exporter state-run KOICL Ltd shipped 1.45 million tonnes to China in the last fiscal year.

“Exports will be viable for pellets makers," said Sharma, as the union government slashed export duty on pellets to zero from 15%, in its 2011/12 budget presented on 28 February.

The share of pellets in total iron ore exports has been falling steadily from the peak scaled in 2000, when it reached 21.3%. In 2008, it fell to 15% and to 9.5% in the following year.