Indian Iron Ore Export Likely to Touch 3-4 MnT in FY16

1. Indian Railways reduced freight to boost exports
2. Aggressive e-auctions and mining resumption in Goa
3. NMDC’s export agreement with Japanese and South Korean Steel Mills

SteelMint anticipates that iron ore exports from India will be 3-4 MnT by the end of this financial year.

Until now, export was low due to high cost of exports and falling prices in global market. Only 39,300 MT iron ore had been exported. But since global iron ore prices are finding some strength, Indian iron ore export may boost to around 3-4 MnT.

Meanwhile, Indian government also took some supportive measures to boost exports from India. Recent cut in railway freight, reduction in export duty on low grade ore are some of the measures taken by the govt. to support Indian iron ore exports.      *till Aug’15 

Indian Railways cut freight to boost exports

Recently Indian Railways reduced freight rates to boost exports. The govt.has levied flat distance based charges (DBC) of INR 300/MT across all slabs ranging between 0 to 700 kms w.e.f. 08 Sept’15.

However, global iron ore prices are still a long way to go for this measure to benefit Indian iron ore exporters.

Also, it seems the government took the decision to reduce DBC considering NMDC’s new long term export agreement with Japan and South Korea.

Aggressive e-auctions and mining resumption by Goa

Government of Goa is all set to clear the mining sites in order to initiate fresh mining by next month. To restart mining, govt has scheduled consecutively 6 more e-auctions this month.

Vedanta has already resumed its mining in Goa at Codli Mines and is in talks with China’s steel mills to export low grade ore to them. The company has permission to mine 5.5 MnT iron ore pa. Goa’s iron ore production is expected to be around 5 MnT by the end of FY16.

To boost exports and revive Goa mining industry, the govt. reduced export duty on low grade ore from 30% to 10% w.e.f. June’15.

Also, now the Indian exporters are demanding to withdraw the 10% export duty to survive and compete in current scenario.

NMDC’s export agreement with Japanese and South Korean Mills

NMDC, under a long term trade agreement (LTA), will export 3.8 to 5.5 MnT high grade iron ore to Japan and Korea.

The agreement will also help utilize surplus production of iron ore currently available in India. However, its terms and conditions are yet to be finalized.

Also, NMDC has proposed to increase its production to 35 MnT for FY16.