The iron ore trade
As Goa grapples with the intricacies of the mining ban, the announcement of a financial package for the mining dependent and the splitting of political hairs over who is responsible for bringing Goa’s iron ore export industry to a halt, invoking hate against RTI activists, environmentalists et al, it may be helpful to get some clarity on the State’s present and future position.
The Federation of Indian Mineral Industries (FIMI) has recently told news agencies that iron ore exports from India have dropped 68.2 % in the April-January period of the current fiscal to 16 million tonnes. The prognosis for the future is that exports would further drop next fiscal to single digits, and India would be a net importer of iron ore in the region of 20 million tonnes. The drop in exports is of course directly attributed to the bans imposed in the major iron ore producing and exporting states of Karnataka (where a ban was imposed in 2010), Goa and the cap imposed in Odisha, following investigations into illegal mining and violations of environmental laws.
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FIMI has openly blamed the domestic steel industry for being responsible for part of the ore exporters and traders’ woes. It has in the past accused the government of bowing down to the steel ministry in imposing an export duty of 30 per cent on iron ore. Analysts in the ore industry are equally open about the fact that the domestic steel industry got alarmed after international ore prices hit US $140 per tonne, diverting much of India’s iron ore production, including high grade ore, to overseas markets creating worries over supply to the Indian market. While the ore industry has insisted this was a war to procure ore at depressed prices, much lower than the international rates, industry bodies like Assocham had asked the government to protect the interests of the steel industry and resist pleas to lower export duty on iron ore.
Iron ore exports have steadily seen the erection of several barriers since 2008, indicative of the tussle between the ministries of steel and mines within the Central government and the industries that come under them. In 2010 a 5 per cent export duty was introduced, in 2011 it was raised to 20 per cent and in 2012 to 30 per cent. Between 2010 and 2012, the Railways increased freight nine times. And the MB Shah commission began looking into illegalities in the ore export trade, resulting in bans in Karnataka and Goa, and a cap in Odisha. Iron ore exports plummeted under these measures from 120 million tonnes in 2009-10 to 17.3 million tonnes in 2012-13.
What does this mean for Goa? The mining sector here has long held that Goa’s low grade ore has no demand in the domestic market, feeding just 5 per cent even to pig iron plants located in Goa that import 95 per cent of ore from outside the state, because Goan ore is low grade. At the same time, as supply overtakes demand in the international market, a lull in prices is on the cards, according to industry analysts, who see spot market prices dipping in the next two years. Where this will leave the State’s economy is something that has yet to pan out. But one thing is sure ~ there will never be a return to the old days.
