The Ministry of Railways has come up with a new policy regarding allocation of rakes and transportation of iron ore in the country. To come into effect from 10 Feb’21, the ‘Iron-ore Policy 2021’ sets clear guidelines on leveraging infrastructure facilities available at both the loading and unloading ends. It ends the existing categorisation of customers on the basis of CBT/non-CBT and treats old and new plants alike.
New classification
Customers owning steel, pig iron, sponge iron, pellet and sinter plants are categorised into 3 groups of priority. Customers having their own private sidings at both loading as well as unloading ends have been classified as C + category. Those with private siding at either the loading or unloading end are classified into C category, while customers without any private siding of their own and who rely on public sidings are grouped into C– category.
The new policy prioritises movement of iron ore on the basis of availability of railway infrastructure developed by the customer concerned for loading and unloading of iron ore. The circular, dated 15 Jan’21, states: “Assured allotment in supply of wagons is to be given to customers who have invested in private terminals”.
Low priority for export movement
Importantly, export traffic will be booked under priority D. To differentiate rail-cum-sea traffic used for domestic steel-making from export traffic, customers need to produce a self-declaration. Pellet and sinter traffic has been accorded D priority. Dispatch of low-grade fines or “iron ore rejects” generated during the process of manufacturing has been freely allowed under priority D to any location.
It is hard not to notice the nominal priority accorded to iron ore exports in the new policy regardless of the fact that the volume of iron ore movement for exports via railways is by no means minimal. As per SteelMint data, iron ore and pellet rake movement for exports touched 19 mn t in CY20 – over 35% of total export movement of 53.85 mn t via rakes.
As is evident, the new policy accords higher priority to seamless iron ore traffic for domestic manufacturing activity, according less importance to movement of material for exports. However, it is unclear whether this is part of a broader policy strategy to disincentive exports.
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