Iron ore exports fall 27%, local mills adapt to low-grade lumps

Tags: Industry
Iron ore exports from India fell by 27.6 per cent to 12.5 million tonnes from year ago levels, as falling global iron ore prices coupled with full and partial mining ban in Goa and Karnataka led to decline in production and forced companies to focus on domestic demand.

The country produced around 116 million tonnes of iron ore in April to January 2014, according to Federation of Indian Mineral Industries data.

From the peak of around 213 million tonnes in 2008-09, iron ore production came down to 136 million tonnes in 2012-13 following the mining ban by the Supreme Court.

While ban on iron ore mining in Goa continues, in Karnataka the court has allowed mining of category A and B mines. But not all B-category mines are operational as they are waiting for the final nod after completion of the rehabilitation programme.

According to analysts, ban on mining in Goa was the main reason for the sharp decline in exports. Also global iron ore prices have declined in tandem with fall in consumption of steel, they say.

Improvement in domestic demand and use of the low-grade iron ore also

contributed to the decline. Many steel companies in the country have

set up beneficiation plants to clean the low-grade iron ore. In the

absence of beneficiation plants, most ore below 55-56 per cent of iron

content used to be exported.

Bhavesh Chauhan, an analyst at Angel Broking, said, "Iron ore prices

globally have declined following the fall in steel demand, making it

less attractive for exports." Pointing to the ban on mining of ore in

Goa and restrictions in Karnataka and Odisha as main reasons for

decline, he said, "Since the production is low, exports are also


While excise duty on iron continues at 30 per cent, the mining ban in

Karnataka and Goa has helped spur sales by miners from Australia,

Brazil and South Africa, pushing India to the ninth place last year

among world exporters to China, said Chauhan.

In Karnataka, annual production remains capped at 30 million tonnes

and exports are banned. Though the mining ban imposed in 2011, was

lifted by the court in April last year.

The court has also set up a panel to suggest curbs on output in Goa as

part of an appeal to lift a ban on mining since September 2012.

It's almost a year that the top court granted permission to 115 mines

including category A and B mines in Karnataka to start operations. But

only 25 mines are operational as most mines are awaiting statutory

clearance, which they will get only after complying with the

rehabilitation and resettlement plan.

Sanjay Jain, an analyst at Motilal Oswal, said, "Steel companies like

JSW Steel, Steel Authority of India Ltd among others have

beneficiation plant to use the low-grade iron ore. Domestic ore prices

are at a higher level compared with global prices, so it is more

lucrative for producers to sell in the domestic market rather than



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