Inventory of iron ore is going up at mine heads with the lack of enough demand to absorb lower grade fines and downtrend seen in exports.
At the end of 2016-17, 148.66 million tonnes of iron ore had accumulated at the mine pit heads and the figure is estimated to breach 150 million tonnes by 2017-18 end. The stock is made up mostly by low-grade fines for which there is no demand in the domestic market.
“Iron ore fines are mostly getting piled up in Odisha and Jharkhand as lower grade fines (iron content between 58 and 62 per cent) could not be exported due to prevailing export duty. Also, China’s steelmakers have shown the propensity for buying higher grade iron ore on pollution concerns”, said an industry source.
Data compiled by mining lobby body Federation of Indian Mineral Industries Ltd (Fimi) shows exports of iron ore have slid from 30.48 million tonnes in 2016-17 to 18.47 million tonnes (mt) in FY18 (January-end). On the contrary, imports of iron ore in the comparable period have shot up from 4.6 mt to 5.95 mt.
Of the total stock of 148.66 million tonnes, Odisha’s mine heads have accumulated 86.49 million tonnes. Jharkhand comes next with stock of 40.85 million tonnes whilst another iron ore producer Karnataka has 10.44 mt. Together Odisha and Jharkhand are contributing 85 per cent to the stockpile at mine heads. Both the states produce iron ore of higher grade than Goa (more than 58 per cent) whose exports are taxed at 30 per cent. Fimi has been repeatedly appealing to the Centre to abolishing export duty for iron ore up to 62 per cent.
The Odisha government, too, had alerted the Union mines ministry on rising stocks of iron ore and the need to reduce export duty to nil. Though the state recorded iron ore production in upwards of 100 mt, lack of domestic market to absorb this ore was a limiting factor. In the context of plummeting international prices, exports from Odisha were not competitive with the prevailing 30 per cent duty.
The other worrying factor is skewed demand-supply scenario for domestic iron ore. India’s iron ore output in FY17 was 191 mt but compared to this, domestic demand was only 107.91 mt, growing barely 10 per cent over the year-go fiscal- in the same period, production moved up 23 per cent. Though exports saw a substantial increase to 28 mt in FY17 (from 4.5 mt in 2015-16), they were mainly done by National Mineral Development Corporation (NMDC). The public sector miner’s exports are canalised through MMTC and enjoy concessional export duty of 10 per cent.
Tentative figures for iron ore output in last fiscal has been pegged at 210 million tonnes.
Source: Business Standard