India: Iron ore companies cut 80% output on adverse policy and weaker demand

September 14,

“India’s independent Iron ore mining companies have cut output by 80% since June due to uncertainty over exports and recovery in demand from domestic steel mills”, says RK Sharma, secretary general of the Federation of Indian Mineral Industries (FIMI).

Southern Railway, which used to transport 25 rakes every day, is handling only five. Hardly 20% of India’s total annual output of 235 million MT is being extracted from mines across the country, he added

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There are three reasons for the fall in output.

• Increase in royalty to 10% of the cost of output from Rs 27 a tonne about a year ago.
• China’s ban on import of low-grade Iron ore (with less than 60% of Iron content). This hit hard as most of India’s Iron ore export comprise mainly low-grade ore.
• Finally, Karnataka Government’s ban on export of Iron ore from various ports as an effort to curb the illegal mining.