Iron ore exports fall 27%, local mills adapt to low-grade lumps
Apr 07 2014 , Mumbai
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