Iron ore export to China from east India plunges 46%

Because of high export duty imposed by the government, iron ore exports to China from India's eastern state of Odisha, the largest iron-ore producing state in the country, dipped by 46 percent in 2011-12 to 12.96 million tons (mnt) as against from 24.12 mnt a year ago.

China is the single biggest market for export of iron ore from India.

Due to the 30 percent duty, iron ore exports from the whole of India have also dropped by nearly 40 percent to 60 mnt in 2011- 2012 from 98 mnt in the previous year.

Odisha's share as percentage of total iron ore exports from the country also decreased from 25.5 per cent in 2010-11 to 21.6 per cent in 2011-12.

The steep export duty imposed by the central government has rendered the bulk mineral ore uncompetitive in the export market, especially China where Indian shipment plummeted from 89.72 mnt in 2010-11 to 52.47 mnt in 2011-12 (up to February 2012).

The reason why India increased its export duty on iron ore from 20 per cent to 30 per cent is to discourage the export of the mineral since it wants to retain supplies for its own steel manufacturing industry.

China, which bought 15 per cent of its iron ore from India in 2010-11,was considering alternatives as ore imports from India had gone down suddenly following the hike in export duty.

A leading iron exporter from the state, on condition of anonymity,said, "Exports of iron ore have become non-remunerative especially after the introduction of the 30 per cent export duty. What has added to our woes is that China, which is our biggest buyer of lump ore and fines, has been lately growing at a slow pace, impairing demand and cooling ore prices to 140 U.S. dollars per ton."

This, along with the increase in rail freight charge and other charges including royalty, port handling, and local transportation, "has hit us hard," the exporter said.

"China's decelerating economy has also led to a situation where we have excess supply of the mineral. Though there is talk of beneficiation and pelletisation, we lack the right technologies for processing low grade ore," he added.

Latest data from the Directorate of Export Promotion & Marketing showed that exports in iron ore in lump form, predominantly bound for China from Odisha, were valued at 710 million rupees (12.9 million U.S.dollars) in 2010-11. Iron ore in fines, mainly shipped to China and Hong Kong, were valued at 81.14 billion rupees (147.5 million U.S. dollars) in the same fiscal year.

As a result of this development, iron ore export traffic has also slumped sharply from the six to seven ports. For instance, the shipment of ore from the Paradip port was almost halved from 13.54 mnt in 2010-11 to 6.80 mnt in 2011-12.

Iron ore shipments from Vishakhapatnam port also nosedived by 282.90 per cent from 1.18 mnt to 0.31 mnt in the same period.

The downtrend in export traffic was also seen in the ports of Kolkata,Haldia, Gangavaram and Kakinada.

Mineral exports, including iron ore lump, fines, chrome ore, chrome ore concentrates and ilmenite account for nearly 60 percent of Odisha's overall exports.

Despite being the biggest iron ore producer and having the highest chromite deposits (about 97 percent), Odisha has been demanding for a ban on exports of both the ores to secure raw materials for local industries.