30 JUL, 2012, MEERA MOHANTY, ET BUREAU
NEW DELHI: The federation representing merchant miners in the country claims stocks at mine heads reveal that there is no real shortage of iron ore, a key steelmaking ingredient.
In a letter to the finance ministry, the Federation of Indian Mineral Industries, or FIMI, has accused the government, both at the state and centre, of creating an artificial barrier through high export duty and freight charges.
Exports are down 42 % in the last two years and has cost the country an opportunity loss of $8.3 billion in forex, claimed FIMI. It believes the 30% export duty was premature and counter productive, and holds it particularly responsibly for this "state-induced" supply crunch in iron ore.
In the two years since the last quarter of 2009-10 there has been a cumulative increase in railway freight of 126%, which translates into 40% of realisation on iron ore.
As on March 31, 2012, mine-head stocks added up to 123.5mt and production to another 169.66mt says FIMI quoting Indian Bureau of Mines, or IBM data, which functions under the ministry of mines and minerals. Supplies to steelmakers (other than SAIL and Tata Steel who have their own captive mines) totaled 64.63MT.
After accounting 57MT of exports in 2011-12, it still leaves the country with a 138.77mt of iron ore. "Where's the shortage?" asks FIMI, arguing for rollback on export duty on iron ore.
Its petition comes days after similar pleas from industry chambers Ficci and Assocham on behalf of the steel industry. A source in the industry said the mines ministry is ready to ask for easing the 30% export duty in the wake of falling exports.
FIMI instead wants a 30 % duty on the import of iron or pellets to protect the interest of merchant miners. Import of pellets are steadily on the rise from 122,331 tonne in April to 174,319 tonne in May (dipping to 73,278 tonne in April) this year.
This recent trend is forced by the shortage of available, usable iron ore in the country in lieu of regulatory moves by the states and courts to reform iron ore mining practices.
"This (imports) is even more serious in the current context of the depreciating rupee. In the last two years, the country has lost worth $ 8.3 billion in foreign exchange due to lower export of surplus iron ore fines,' claimed FIMI's chairman in his July 23 letter to finance secretary RS Gujral.
India's steel-making capacity is largely dependent on iron ore lumps. It doesn't have enough installed processing (beneficiation and pelletisation) capacity to use fines, and low-grade ore, also produced during mining. Much of this, like Goa's largely low-grade output, was being exported to China.
Roughly at 30-70, the lumps to fine ratio fall as mines grow older. Domestic requirement of fines (again excluding SAIL and Tata Steel) currently does not exceed 30 mt. Merchant miners argue restricting exports of fines only results in a pile up at mine heads, hindering production.
NEW DELHI: The federation representing merchant miners in the country claims stocks at mine heads reveal that there is no real shortage of iron ore, a key steelmaking ingredient.
In a letter to the finance ministry, the Federation of Indian Mineral Industries, or FIMI, has accused the government, both at the state and centre, of creating an artificial barrier through high export duty and freight charges.
Exports are down 42 % in the last two years and has cost the country an opportunity loss of $8.3 billion in forex, claimed FIMI. It believes the 30% export duty was premature and counter productive, and holds it particularly responsibly for this "state-induced" supply crunch in iron ore.
In the two years since the last quarter of 2009-10 there has been a cumulative increase in railway freight of 126%, which translates into 40% of realisation on iron ore.
As on March 31, 2012, mine-head stocks added up to 123.5mt and production to another 169.66mt says FIMI quoting Indian Bureau of Mines, or IBM data, which functions under the ministry of mines and minerals. Supplies to steelmakers (other than SAIL and Tata Steel who have their own captive mines) totaled 64.63MT.
After accounting 57MT of exports in 2011-12, it still leaves the country with a 138.77mt of iron ore. "Where's the shortage?" asks FIMI, arguing for rollback on export duty on iron ore.
Its petition comes days after similar pleas from industry chambers Ficci and Assocham on behalf of the steel industry. A source in the industry said the mines ministry is ready to ask for easing the 30% export duty in the wake of falling exports.
FIMI instead wants a 30 % duty on the import of iron or pellets to protect the interest of merchant miners. Import of pellets are steadily on the rise from 122,331 tonne in April to 174,319 tonne in May (dipping to 73,278 tonne in April) this year.
This recent trend is forced by the shortage of available, usable iron ore in the country in lieu of regulatory moves by the states and courts to reform iron ore mining practices.
"This (imports) is even more serious in the current context of the depreciating rupee. In the last two years, the country has lost worth $ 8.3 billion in foreign exchange due to lower export of surplus iron ore fines,' claimed FIMI's chairman in his July 23 letter to finance secretary RS Gujral.
India's steel-making capacity is largely dependent on iron ore lumps. It doesn't have enough installed processing (beneficiation and pelletisation) capacity to use fines, and low-grade ore, also produced during mining. Much of this, like Goa's largely low-grade output, was being exported to China.
Roughly at 30-70, the lumps to fine ratio fall as mines grow older. Domestic requirement of fines (again excluding SAIL and Tata Steel) currently does not exceed 30 mt. Merchant miners argue restricting exports of fines only results in a pile up at mine heads, hindering production.
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