India's Iron Ore Exports May Drop 38% on Karnataka State Ban, Group Says
Iron ore shipments from India, the world’s third-largest exporter, may fall as much as 38 percent this fiscal year because of higher taxes and freight charges, and a ban imposed by the state of Karnataka.
Overseas sales may decline to as low as 66 million metric tons in the year ending March 31 from about 106 million tons a year ago, Federation of Indian Mineral Industries President Siddharth Rungta said today in a phone interview. Rungta had estimated a 25 percent drop in April.
India, which increased freight charges and taxes on ore exports to boost local supplies and curb costs, may consider a nationwide ban on ore exports “if needed,” Steel Minister Virbhadra Singh said on May 19. Purchases by China, the largest buyer of the steelmaking ingredient, rose for the first time in four months in July, indicating steelmakers are restocking after depleting inventories.
“Karnataka has banned exports of iron ore from the state, which may knock off about a quarter from total exports,” Rungta said. “Exports have been falling due to higher railway freight and taxes.”
India’s ore exports for July fell 27.6 percent to 4.74 million tons from a year earlier, the Federation of Indian Mineral Industries said today in a statement.
The southern Indian state of Karnataka, the second-largest producer of the ore, banned exports starting July 26. India raised the export tax on ore lumps to 15 percent from 10 percent and introduced a 5 percent tax on ore fines in December. Rail freight rose about 50 percent to more than 2,300 rupees ($49) since February.
Karnataka exports about 30 million tons annually, mainly to China, Rungta said. The private miners in the state have gone to court seeking a stay on the government’s decision, he said. Sesa Goa Ltd. and NMDC Ltd., the country’s top two producers, together turn out about 8 million tons in the state.
To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net.
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