Indian iron ore exports dwindle

China wants it, but India has none to give. Iron ore exports are set to touch a new five-year low in India, following a huge shortage in the availability of ore for exports. A week-long shutdown enforced by rebel Maoists has also brought things to a standstill with iron ore transportation by NMDC Ltd, India's largest iron ore producer and exporter in the public sector.

Some of the firm's key mining facilities in Chhattisgarh are under attack. NMDC Ltd has several mines at Bailadila in insurgency-riddled Dantewada district in Chhattisgarh, where the firm produces more than 75% of its total annual iron ore output.

The firm has decided to take matters into its own hands and, in a bid to meet the huge demand of Chhattisgarh sponge iron producers for iron ore, has initiated a move to push three rakes of ore a day.

Rana Som, managing director of NMDC said three rakes total about 12,000 tonnes, and is bound to meet the requirements of the mini steel plants located in the state.

Traders have also maintained that iron ore prices are set to rise by 9% in January 2011, as tight supplies are expected to push steel prices ever higher. Though China is the world's largest importer of steel, India is expected to set the course of price increases in 2011, as the country continues to battle  tight supplies.

As for the export status, matters have come to a head with several factors coming together and bringing into play a major scarcity - the ban on exports from Karnataka; the extended monsoon which impacts mining activity; and the crackdown on illegal mining in states such as Orissa - all of which have played spoilsport.

Iron ore exports had touched an all time high of 117 million tonne in fiscal 2009-10, on account of the rising demand from China. To understand the jump, exports were only around 78 million tonne in 2004-05. However, traders state that exports for the current fiscal would not be able to cross the 90 million tonne mark.

Exports for the April-October period are down almost 13% to 46.4 million tonne, as against 53.2 million tonne in the corresponding period of the previous year. For the month of October, exports were down 30% at 6.4 million tonne, as against 9.2 million in October 2009.

According to the Federation of Indian Mineral Industries, some non-major ports have posted a growth in iron ore traffic during April and October this year, though this has not helped much in the overall export figure.

The Belekeri port showed 35.9% growth at 18.21 lakh tonne （from the 13.4 lakh tonne of the previous year）, the Gangavaram port recorded a jump of 6.83% at 11.26 lakh tonne （as compared to 10.54 lakh tonne in the corresponding period of last year）, the Karwar port recorded a 20.52% rise at 6.93 lakh tonne （from the 5.75 lakh tonne）, and the Redi port had a 445.1% rise at 2.78 lakh tonne （from the 51,000 tonne of the previous corresponding year）.

As for the major ports, only the Mormugao, Panjim port at Goa showed an increase of 13.7% at 20.7 metric tonne （from the 18.27 metric tonne of last year）.

Incidentally, the NMDC shutdown has brought several other factors into play. In response to the request from the Chhattisgarh chief minister Dr Raman Singh, who was approached by the Chhattisgarh Sponge Manufacturers Association and Chhattisgarh Mini Steel Plants Association, the company has decided to push the rakes.

The non availability of adequate rakes on a regular basis was the major bugbear. Traditionally, the Chhattisgarh sponge iron units depend largely on Orissa's mines, which are mostly privately owned, for the supply of iron ore.

A total of 110 units require an estimated 10 million tonnes of ore annually, 70% of which is met by the mines in Keonjhar district of Orissa and the balance 30% by NMDC's mines in Chhattisgarh.

Though the shutdown has not affected iron ore production at Bailadila, transportation has taken a hit adding to the woes of the industry, and the resultant hike in prices. At the start of the month, spot benchmark iron ore prices rose to $167.80 a ton, which was the highest level since last May, and up 40% since hitting a low earlier this year at $117.60.