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Export of Indian iron ore lumps may drop on duty hike

The recent duty hike on iron ore lumps will accelerate the downward trend in exports of the commodity, which has seen a steady decline in the past four years.

The Government increased the export duty on iron ore lumps to 15% from 10% to discourage exports and improve raw material availability for local steel mills.

(In million tonnes)

Mr RK Sharma secretary general of the Federation of Indian Mineral Industries said that "The duty increase will have a major impact on exports of lumps. We expect the exports to halve this year to 5 million tonne to 6 million tonnes."

According to provisional numbers, India's iron ore lump exports was around 11 million tonnes in 2009-10 and have declined by 28% in the past four years from a peak of 15.3 million tonnes in 2006-07.

FIMI expects the overall iron ore exports to decline by around 5% in the current financial year. Indian iron ore exports peaked at 106 million tonnes in 2009-10 from 78.14 million tonnes in 2004-05, primarily driven by the demand from China.

Mr Sharma said that "We may not cross 100 million tonnes this year adding that India is a residual supplier mainly addressing the shortfall in the Chinese demand and supply gap of Brazil and Australia. China, the world's largest consumer, imported 628 million tonnes in 2009."

He added that "The iron ore lumps are largely consumed by the Indian steel units, mainly the sponge iron manufacturers. The lumps are not in demand worldwide and accounted for about a tenth of total Indian exports."

(Sourced from BL)