India's iron ore output and exports

Mon Aug 15, 2011

NEW DELHI (Reuters) - India's iron ore exports, which fell for the first time in a decade last year, could halve over the next five years as the country feeds the expansion of its steel industry.

Here are some key facts about the Indian iron ore industry:

PRODUCTION:
- India produced 212.6 million tonnes of iron ore in 2010/11 and exported 97.6 million tonnes.
- There are about 500 mines in the country, half of which are operational. These are held by about 80 companies.
- High-grade ores with 62-65 percent iron are produced mainly in the east and south. Low-grade ores with 50-60 percent iron are produced in the west and south.
- The largest mining firm is state-run NMDC, which produces about 29 million tonnes annually, mostly for local sales.
- The steel industry is a big domestic user of iron ore. Many steel companies have captive mines.

EXPORTS:

- India is the world's third-largest exporter after Australia and Brazil. Goa is India's biggest exporter.
- China is India's biggest buyer, with its proximity helping it secure ores with low freight costs. India sells the bulk of its iron ore via the spot market.
- The largest exporting company is Sesa Goa, a unit of London-listed Vedanta Resources.
- Other large producers and exporters are Essel Mining, Rungta Mines, V.M. Salgaocar, MSPL and Chowgule.
- Miners in Goa have lower costs as mines are located near the port, and so avoid road and rail charges.

CHALLENGES:
- In its 2011/12 budget, the federal government hiked export duties on iron ore to 20 percent from 5 percent for fines and from 15 percent for lumps in a bid to cool domestic prices to help steel firms.

- Shipments from Karnataka, source of a quarter of India's annual exports, have been banned since July 2010 and exports have yet to resume despite a Supreme Court order allowing shipments from April 20.

- Port infrastructure is poor and vessels can wait up to seven days to load cargo.

- Indian prices generally follow the global market, dominated by Australian and Brazilian miners, with China buying on a spot basis for its low-grade ore needs.

- Slower exports could mean a surge in stocks of fines, complicating storage problems at mines. The Karnataka ban led to an estimated 15 million tonnes of unsold stocks of low-grade ore lying in the mines as of late July this year.

FUTURES

- The world's first iron ore futures debuted in India on Jan. 29, but volumes have been muted as participation of foreign players is not allowed.

Sources: Federation of Indian Mineral Industries, industry members and Ministry of Mines.