Weak Goan ore export fails to dent iron ore trade
India's total iron ore trade volumes, including that of pellets, during in the first three quarters of the current financial year moved up 1.36 per cent on year-on-year (yo-y) basis despite a sharp fall in exports from Goa — the country's largest iron ore exporting state.
According to Indian Port Association's (IPA's) data, total iron ore trade volumes during the nine-month period stood at 33.46 million tonnes (mt) up from 33.01 mt in the corresponding period last year. Increased contribution from Mumbai and New Mangalore ports this year has made up for the loss from Goa's Mormugao port.
The share of iron ore trade against the total trade volume, however, was slightly lower at 6.7 per cent in the period under review against 6.9 per cent in April-December 2016.
“This year, KIOCL (Kudremukh Iron Ore Company) as part of the Make in India initiative has resumed imports of iron ore from Odisha via coastal movement, and has exported equal quantity of iron ore pellets to Iran. Due to this, volumes of ore handled have doubled (during April-December) compared to the last year,” Y R Belagal, traffic manager at New Mangalore Port, told Business Standard. State-owned KIOCL Limited, which has a pelletisation plant in Mangalore, is under the Ministry of Steel.
In the period under review, iron ore exports from Goa have declined 38 per cent as demand from countries like China, Japan and South Korea was for ore with higher ferrous content (58 per cent Fe) . Since, Goan ore exports with 58% Fe and above attracts an export duty of 30 per cent, miners of this region are losing out on export opportunity.
“The 30 per cent duty is hitting us very hard. Within two months (October-November), Goan iron ore exports fell to less than 700,000 tonnes from more than 2 mt in the same period last year,” said Glenn Kalvampara, secretary of Goa Mineral Ore Exporters Association.
Goa is a low-grade iron ore miner and exports most of its ore as the commodity does not find application in the domestic steel market which demands ore grade of more than 62 per cent Fe content. Though Goan ores have less than 58 per cent Fe, through beneficiation, miners have been pushing up the grade by up to three per cent, making it suitable for the export market.
“Though beneficiation process adds to the costs of Goan miners, we can still have a decent earning. But, due to high taxation, which is not uniform when compared to other states, Goan miners are losing out. Apart from export duty (on above 58% Fe ore) and 30 per cent towards DMF (district mineral fund ), Goa iron ore fund attracts 10 per cent additional tax,” said Kalvampara.
Mumbai Port, which is also making up for the loss from Goa iron ore trade, is catering to Sajjan Jindal's Dolvi plant as the company has imported 5.5 mt iron ore in the period under review..
Though the overall iron ore trade seems to be in a comfortable position until December, the final quarter of the fiscal will be crucial as suspension of seven iron ore mines by the Odisha government could have a negative impact on trade volumes for FY18. The final quarter is part of the peak mining season in the country that starts in October.
Jan-Mar quarter is crucial as Odisha mines' suspension poses threat of lower contribution to FY18 iron ore trade