India: Iron ore exports to hit a new low in FY13

Monday, 13 February 2012

India’s iron ore exports are likely to hit a new low during the 2012-13 financial year and settle at about 40 million tonnes (mt), a drop of close to 35 per cent over the current year’s estimates. Exports are estimated to decline to about 60 mt in 2011-12 from 100 mt in 2010-11, a fall of 40 per cent.

“The decline in exports is mainly due to rise in export duty to 30 per cent and railway freight, which is highly discriminatory for exports compared to domestic freight rates. Before 2003, nobody bought low-grade ore from India. In the future, too, apart from China, nobody will buy low-grade ore,” said Basant Poddar, chairman, Federation of Indian Mineral Industries, South.

For example, the railways charge Rs 600 a tonne as freight for movement of ore for domestic consumption and Rs 2,800 a tonne for ore meant for exports. This has discouraged miners from exporting, he said. Another major factor for low exports is the ban in Karnataka. In addition, the stoppage of mining in Karna-taka, following the Supreme Court order in July, added to a decline in exports during the current financial year.

Orissa’s exports have come down mainly due to differential railway freight rates. Goa’s exports have also declined substantially this year and may settle at about 34 mt, down from 55 mt last year, he said. Karnataka’s share in national exports was about 35 mt till 2009-10. Since August 2010, there have been no exports from the state. Next year, India’s exports will touch the lowest level in the past decade.

“Demand from China is steady, but they are also getting ore from Australia and Brazil also. Australia and Brazil are together adding about 500 mt of exportable capacity in the next five years. Whereas, in India, we are closing our mines and losing our status as the third-largest exporter of ore in the world. We may drop to sixth or seventh position,” Poddar said.

During the current year, India’s share of exports in the world market is set to decline to about 10 per cent. In the next year, it is likely to further drop to about five per cent, at 35-40 mt. Prices of 63 Fe grade iron ore, presently at $130-135 a tonne on a FoB basis in the international market, are likely to go up 8-10 per cent during the current quarter, as the demand from China is picking up after the beginning of the new year. At the same time, Indian miners are losing their position due to various reasons, said Praveen Kumar, chairman, Maya Iron Ores, a derivative commodity brokerage firm.

“If the Supreme Court accepts the Central Empow-ered Committee’s (CEC) recommendation and puts a cap on the production of iron ore at 30 mt in Karnataka, investments in the steel sector will not only be affected, but it would also lead to loss of market share for India in the export market,” he said.
The loss means future investments to the tune of about $5-10 billion in the ports and railway sectors taken up on a public-private partnership basis will be in jeopardy, Poddar noted.

“The Indian steel industry uses high grade ore and there is no market for low-grade ore, due to poor technology with steel mills. So, why stop low-grade ore exports , which has huge demand from China? If we can’t export it, there will be a problem in managing low-grade fines and it would cause environmental damage,” he added. (sourced Business-Standard)

FIMI favors underground iron ore mining in Western Ghats

Sunday, 12 Feb 2012

The Federation of Indian Mineral Industries has suggested to the government to take up feasibility study of underground mining in Karnataka's Western Ghats.

In addition to 2.16 billion tonnes of haematite ore deposits in Karnataka, there is magnetite ore to the tune of 7.8 billion tonnes.

Mr Basant Poddar chairman of FIMI South said that “FIMI is ready to support feasibility study between northern boundary of Bababudan Giri hills in Kudremukh up to Goa.”

He added that “Underground mining is successfully working beneath Johannesburg in South Africa and Stockholm in Sweden. This is an option the Government has to consider seriously, to tap magnetite iron ore of 7.8 billion tones.”

FIMI office bearers said mining in Goa and Maharashtra is on the Western Ghats. Why is that they have permission to mine and not in Karnataka, they questioned.

(Sourced from BL)

Orissa stops iron ore exports permits to 2 ports

Monday, Dec12, 2011

BHUBANESWAR (Reuters) - Orissa has stopped issuing iron ore export permits for cargoes shipped via two ports in Andhra Pradesh, Orissa mines minister told Reuters.

"The Gangavaram and Kakinada ports did not cooperate" with the state mines and steel department's queries on the volume of the ore exported through these ports and the mechanism they followed to prevent illegal exports, minister Raghunath Mohanty said.

The state government had sought such details from all the ports that exported iron ore from the state.

"We will not issue the permits until they (the port authorities) submit details and tell us what system they have," a senior official of the steel and mines department, who did not want to be named, told Reuters.

On the total export of 35 million tonnes iron ore from the country, 2 million tonnes were shipped through these ports in the first seven months of the current fiscal year ending March, data from the Federation of Indian Minerals and Industry, a trade body, showed.

(sourced Reuters)

FIMI urges Indian government not to impose iron ore export ban

Wednesday, 16 November 2011

The Federation of Indian Mineral Industries (FIMI) has urged Indian government not to impose a blanket ban on iron ore exports, as it would "affect India's steel industry and result in the closure of captive mines."

FIMI secretary R K Bansal has said that the domestic steel industry has much more iron ore supply than the required volume. A blanket on iron ore export will cause most non-captive mine to close. It is stated that due to mining halt, exploration will also stop preventing further additions to reserves and resources.

FIMI also suggested that steel plants should not be allowed to have captive mines since the domestic iron ore production is already more than the domestic demand and will continue to be so for the next few years.

Tags: iron ore , India , raw mat , South Asia , Indian Subcon , mining , quotas & duties
Sourced:steelorbis

FIMI urges not to impose blanket ban on iron ore export

Monday, 14 Nov 2011

The Federation of Indian Mineral Industries has urged the Indian government not to impose a blanket ban on the export of iron ore, as it would affect India's steel industry and result in the closure of captive mines.

Mr RK Bansal FIMI secretary in the letter written to Joint Plant Committee, Union Ministry of Steel, on November 4, has said that there should be no blanket ban or qualitative restriction on ore exports.

FIMI has argued that due to the discontinuation of mining, further exploration would also come to the halt and therefore no further addition to reserves and resources can happen.

Mr Bansal said that "A ban on export will mean that most of the non-captive mines will get closed with consequent adverse impacts on local economy, employment as well as state revenues.”

He said "With the discontinuance of non-captive production, the availability of lumps and high grade fines to the steel industry will get reduced, thus proving counter-productive to the interests of the steel industry.”

The federation has also demanded that export duty should not be imposed as exports provide cushion against fluctuation in demand and prices in the domestic market and vice versa.

It has said that there should be no captive mines allowed to any steel plant, since the domestic iron ore production is already surplus to the domestic demand and will continue to be so for next few years.

FIMI has urged the centre to develop iron ore mining as a standalone mining industry, separate from steel industry, so that, both could work at arm's length and benefit from each other's strength and innovations rather than take shelter behind the safety net available.

(Sourced from ET)

Iron ore price slump to deepen despite Indian supply cut

Mon, Oct31, 2011

BEIJING/MUMBAI: (Reuters) - With demand from top buyer China still weak, global iron ore prices are not expected to recover in the next few weeks and may not yet be at their nadir despite a slump in deliveries from the world's third largest producer, India.

R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries (FIMI) said on Monday that a precipitous drop in prices since September had made it hard for Indian suppliers to meet their high rail freight and export duty costs, forcing them to cut shipments to a minimum.

Platts' 62-percent iron ore index fell to $116.75 per tonne by the end of Friday, down 19 percent over the week. It has fallen more than $60 per tonne since September, leaving traders to wonder when it will finally hit bottom.

A senior Chinese industry official said on Monday he anticipated further declines in coming weeks.

"In my personal opinion, the price of imported iron ore will fall further, because the trends for the whole sector are unlikely to get better and steel mills don't dare to buy ore," said Zhang Changfu, vice-chairman of the China Iron and Steel Association.

The decline in Indian supplies is unlikely to provide any additional support to prices, especially as Australian and Brazilian suppliers remain more than eager to fill the breach, said Ian Roper, commodities analyst with CLSA in Shanghai.

Roper, who has long been predicting a slump in prices, said the biggest impact on supply was not likely to be felt in India, but at China's own iron mines, where production costs sometimes reach as much as $150 per tonne.

"The relevant part will be the decline in Chinese domestic supply -- you've got 80-100 million tonnes of supply that is uneconomic at $110 a tonne," he said.

The top three global iron ore producers, Australia's Rio Tinto (RIO.AX)(RIO.L) and BHP Billiton (BHP.AX)(BLT.L) as well as Brazil's Vale (VALE5.SA), are all in the middle of a big capacity expansion and they say their plans will not be affected by any fluctuations in global prices.

The big three, operating at much lower costs than their counterparts in India and elsewhere, have said falling prices will help drive competitors out of the market.

"We've finally seen the Australians running their mines at a decent rate in the last few months and that has combined with a slightly slower pace of steel production to send the price down," said Roper.

"The miners will always pursue a volume over price strategy," he said.

INDIAN EXPORTS FALLING

India has already been making efforts to reduce exports, saying it wants to give priority of supply to its own steel sector, but it has struggled to bring new smelting capacity into operation.

FIMI's Sharma said India's biggest iron ore producing state, Karnataka, was now "shut," but no shipments have been made from the southern region since the local government banned exports last year, even though the Supreme Court overturned the ban in April.

Total exports in August fell 43.4 percent from a year ago to 2.65 million tonnes, the latest data from FIMI showed, while shipments to China saw a 24 percent year-on-year decline in the first nine months of 2011.

India charges a higher railway freight on cargoes meant for exports compared with those for local consumption. Earlier this year, the federal government raised the export duty on fines to 20 percent from 5 percent.

CLSA's Roper said it was likely the Indian government would quickly adjust duties and freight rates again in order to give exporters room to operate, especially in the face of a domestic supply glut.

"The Indian government has the ability to respond to keep its mines in the market, but how quickly they do that is debatable," he said.

The prices for lower-grade Indian ores were not now attractive to Chinese buyers, said a senior iron ore trader in eastern China's Shandong province, who sells Indian ore to local steel mills.

"Some suppliers, who have materials available on hand, are not willing to sell their stocks which were bought at high prices," he added.

STOCKPILED HIGH

CISA's Zhang said domestic steel mills were increasingly unwilling to return to the market while their stockpiles of expensive ores were at current levels.

He said stockpiles at eight major ports had now reached as high as 98 million tonnes, with much of that bought at prices of around $165 per tonne.

Zhang's figures were higher than those issued last week by industry consultancy Mysteel, which put port stockpiles at 92.74 million tonnes, still nearly 35 percent higher than the end of October last year.

Roper of CLSA said China's mills were likely to return to the market soon as they replenish inventories for the winter.

"Everyone is destocking like mad now and stepping back from the market while prices are plunging, but this is a short-term cycle and the steel mills will be back within a couple of weeks."

(sourced Reuters)

Indian iron ore exports may decline by 28pct in 2011

Wednesday, 24 Aug 2011

It is reported that Indian iron ore exports are likely to decline 28% this year on falling domestic production due to mine closures across the country.

According to Mr RK Sharma secretary general of the Federation of Indian Mineral Industries, total exports are likely to slump to around 70 million tonnes this financial year, due to fall in production by major private mines.

Total exports from India declined 17% to 97.65 million tonnes in the financial year 2010-11 as compared to 117.37 million tonnes in the earlier financial year.

Iron ore supply to domestic steel and downstream sector units was also hampered due to miners unwilling to continue excavation as domestic steel mills do not lift low grade fines.

Meanwhile, low availability has helped the iron ore price rise to USD 190 a tonne for 63.5 grade iron content. Downstream sectors like foundry, sponge iron and pig iron units, however, are facing a huge slump in demand, due to an overall unfavorable economic environment.

Following a Supreme Court order two months ago, private mining in Karnataka is suspended. The central and state governments also went hard on mining clearances for iron ore miners in other states. Consequently, supply dipped 50% as miners apprehend pumping in of fresh money on excavation, amid fear of action either by the government or the judiciary.

(Sourced from BS)

Indian iron ore mining mess - Shortage cripples steel industry in South India - Report

Friday, 22 Jul 2011 |By BS

BS reported that the steel industry in South India is in doldrums following a severe shortage of iron ore and a large number of sponge iron manufacturers and small steel mills are on the verge of closure while many have already shut shop.

As per report, some of the steel mills like Sathavahana Ispat, Kirloskar Ferrous, Kalyani Steels, Unimetal Ispat, Sandur Manganese and Iron Ore and Sandur Laminates have suspended their operations partially.

Karnataka contributes 30% of the national steel output, at 18.4 million tonnes annually. For 2011-12, steel, pig iron and sponge iron units collectively require 45 million tonnes of ore, while the present availability is limited to about 24 million tonnes which is 48% of the state’s total output.

According to Mr Vinod Nowal CEO and director of JSW Steel and president of the Karnataka Iron and Steel Manufacturers’ Association, 22 of 60 sponge iron plants in Karnataka are closed for want of raw material.

Mr Nowal said that “While we strongly condemn any illegal mining, the government needs to ensure supply of required iron ore to steel plants without disruption.”

He added that “All the industries manufacturing steel, pig iron and the sponge iron, among others, are process oriented units and stopping/ starting of the furnaces involve huge risk and losses. To ensure continuity in the operation of the industries, there is a need to ensure the availability of iron ore to meet the day-to-day demand of various industries.”

Mr Basant Poddar vice president of Federation of Indian Mineral Industries said that “The industry fears the Supreme Court may order closure of many more mines in the BHS region and, if that happens, the availability of iron ore could be reduced to as low as 7 million tonnes to 8 million tonnes, which will be a death blow to the steel industry in the state.”

The shortage of iron ore is in the wake of suspension of activities in almost 50 mines in this state following the direction of the Supreme Court, which is hearing a case on illegal mining. Based on the recommendation of the Central Empowered Committee out of 99 mining leases, the apex court has ordered the shutting of 40 mines in the Bellary, Hospet and Sandur region.

Iron Ore miners up in arms against export duty hike

Mon, March 7, 2011
By Hrithik Kiran Bagade, DHNS

Bangalore : Dealt with a double whammy in the form of ad valorem export duty hike on both their most staple revenue resource — fines and lumps, the country’s iron ore sector is up in arms over the Centre’s move.

Driving the final nail in the coffin of the iron ore industry was also the railway budget which increased freight charges by Rs 100 a tonne, hoping to take advantage of the bullish domestic iron ore market.

While Finance Minister Pranab Mukherjee’s logic in hiking the export duty from five per cent for iron ore fines and 15 per cent for lumps to a uniform 20 per cent on both — can be seen as an effort to soften the rising steel prices in the domestic market by discouraging exports of iron ore, the ore exporters do not agree with the logic.

According to the iron ore exporters, besides badly impinging on the export of iron ore, the Centre’s move would also sound the death-knell of the sector which is already caught in the illegal iron ore mining controversy, leading to its ban in Karnataka, one of the leading iron ore mining states.

Since the mining industry is labour intensive, creating obstacles to exports may lead to huge layoffs. An official of a major iron ore mining company, MSPL, argued that instead of hiking the export duty, the Centre and the State must take steps to curb illegal mining in order to uplift the sector which is already in the doldrums due to the illegal mining controversy.

The steel sector, which has been asking for such a measure for many years, is naturally happy as more ore will be available within the country. Justifying the sector’s demand, which the Centre, in turn, acceded to, an offical from Tata Steel put it: “It is our belief that iron ore as a natural resource is important for the steel industry. It is imperative that value addition of the ore is done within the country for higher realisation.”

However, Federation of Indian Mining Industry Secretary General R K Sharma refused to buy this argument. According to Sharma, the hike, coupled with increase in railway freight will not only make Indian iron ore uncompetitive in the global market it would also affect the export of fines. Furthermore, while reasoning that fines do not enjoy strong domestic demand, he argued that export duty hike would only result in huge stock building without adeqeuate storage facilities. He also added that hike in the duty on lumps will only result in slowdown in total ore mining because fine and lumps are mined together. This in turn may lead to higher price of steel and harm domestic consumers.

Emboldened by the budget’s favourable move, the Tata offical further argued that when iron ore is exported as a finished product with greater value addition, the net realisation is higher, quipping: “Why export the raw material, when the country is capable of producing and exporting the finished product?”

Mukherjee in his budget has also lowered export duty on iron ore pellets to zero to encourage higher value addition in exports. But ore miners say that the demand for pellets from China, the main importer of Indian fine ore, is low because the country has created a huge capacity for making pellets and it imports mostly fines. India, world’s third largest iron ore producer, sells most of its annual exports of 100 million tonne to China. Iron ore exports in April 2010-January 2011 stood at 75.11 million tonne, which was down by 18 per cent from 91.71 million tonne a year ago, according to Fimi data.

Indian iron ore exports to come down by up to 35pct - FIMI

Thursday, 03 Mar 2011, Press Trust of India

Miners' body the Federation of Indian Mineral Industries said as a fallout of the duty hike on iron ore exports in the Budget, India's outbound shipment of the key steel making raw material will come down by up to 35%.

Mr Siddharth Rungta president of FIMI told PTI that "Our logistics costs are already high. The rise in export duty will make it more uncompetitive. I sense iron ore exports from the country will dip by 30% to 35% on an annual basis as a result."

Mr Rungta said that the organization would request the government to reconsider its Budgetary proposal by highlighting possible fallouts of the duty hike move soon.

He said that "Because of the hike in export duty, no fresh contracts are signed now. Only earlier contracts are being honored. Though the impact of export duty hike is not being immediately felt, it will be felt within a month."

Mr Rungta said that the hike in export duty would also lead to lower domestic production of the raw material resulting to an increase in price. Though the cost of mining iron ore in India is more or less the same when compared with others in the global arena, handling and transportation cost here is far higher than other global producers.

While the finance minister Mr Pranab Mukherjee justified the move to increase export duty on the pretext of ensuring raw material security, FIMI maintain there would be no dearth of iron ore in the country for at least next 200 years as India has sufficient reserves to feed the domestic plants.

Budget update - More curbs on iron ore export from India likely

Sunday, 27 Feb 2011, By ET

Steel Minister Mr Beni Prasad Verma called for curbs on exports of iron ore on Friday, as the central government heads into a budget that could raise export duty on the steel making ingredient marginally.

Mr Verma said that "Yes, I am in favor of it. There should be more control on iron ore) exports.”

Mr Vasant Poddar vice president at the Federation of Indian Mineral Industries said that "There could be a marginal hike in export duty of iron ore. These curbs on iron ore exports are not warranted as nobody in the world, be it Europe, Japan, South Korea and US consumes our low grade iron ore, other than China.”

Government is unlikely to approve a blanket export ban as it would prefer better regulation and incentives for increased domestic use of the steel making resource, as demand in the world's second fastest growing major economy rises.

In April last year, government raised the export duty on iron ore lumps to 15% from 10% previously. Duty on iron ore fines stood at 5%.

The ministry of railways hiked the transportation cost 50% to INR 1,500 per tonne on January 27, but kept it unchanged in Friday's Railway Budget.

Tags :raw material, steel mills, steelmaking, Federation of Indian Mineral Industries

India for more iron ore export curbs, duty rise seen

25 Feb, 2011, 06.34PM IST,REUTERS

NEW DELHI/MUMBAI: India's steel minister called for curbs on exports of iron ore on Friday, as the federal government heads into a budget that could raise export duty on the steel-making ingredient marginally.

"Yes, I am in favour of it. There should be more control on (iron ore) exports," Steel Minister Beni Prasad Verma said on Friday.

India's government is unlikely to approve a blanket export ban as it would prefer better regulation and incentives for increased domestic use of the steel-making resource, as demand in the world's second-fastest growing major economy rises.

In April last year, India raised the export duty on iron ore lumps to 15 per cent from 10 per cent previously. Duty on iron ore fines stood at 5 per cent.

The ministry of railways hiked the transportation cost 50 per cent to 1,500 rupees per tonne on Jan. 27, but kept it unchanged in Friday's Railway Budget. The government presents its budget for 2011/12 on Monday.

"There could be a marginal hike in export duty (of iron ore)," said Vasant Poddar , vice-president at the Federation of Indian Mineral Industries ( FIMI )), a trade body. "These curbs on iron ore exports are not warranted as nobody in the world, be it Europe, Japan, South Korea and U.S. consumes our low grade iron ore, other than China," he added.

Supplies of the steel-making ingredient from India have been limited by a ban of shipments from the southern state of Karnataka, which is currently being appealed by exporters in the Supreme Court.

Exports fell for the sixth straight month in December 2010 as the Karnataka state ban continued to bite. Exports were down 24.8 per cent year on year and fell 17.02 per cent in the April to December period.

Iron ore prices have risen around 13 per cent this year, adding to gains of more than 40 per cent in 2010. (sourced:Reuters, ET)

Tags : ban of iron ore shipment from Karnataka, raw material, steel mills