India’s Iron Ore Exports Poised for Biggest Drop in 15 Years

Iron ore shipments from India, the world’s third-largest exporter of the commodity, are headed for the biggest decline in at least 15 years as a mining ban in a key producing region erodes output.

Exports of the steelmaking ingredient tumbled 68 percent to 16.4 million metric tons in the 10 months ended Jan. 31, according to a statement e-mailed by the Federation of Indian Mineral Industries today. Exports may be about 17 million tons in the year ending March 31, said the industry group’s Secretary General R.K. Sharma. That’s the lowest since at least fiscal 1999, according to Sharma and government data.

In September, Goa, the nation’s biggest exporter, banned all mining after a government panel said the state’s exchequer lost an estimated 349.4 billion rupees ($6.5 billion) because of illegal mining. The nation’s top court extended the halt in October. About 127 million tons of iron ore was mined illegally between 2006 and 2011, the panel, headed by former Judge M.B. Shah, said in its September report.

Shipments from Goa fell 69 percent to 10.6 million tons from 34 million tons a year ago in the 10-month period.

Higher taxes and freight charges on iron ore also impeded shipments, said Sharma. The export levy was increased to 30 percent in December 2011 on all grades of ore from 20 percent, while the railways increased freight charges to ports by as much as four times to encourage local supplies.

“Shipments have been abysmal and this trend is likely to continue unless freight and taxes on iron ore meant for exports are reduced,” Sharma said.

Exports from the Paradip port in the eastern state of Odisha declined 81 percent to 1.1 million tons, while overseas shipments from Haldia port declined 70 percent to 950,000 tons, according to the statement.

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