India's Iron Ore exports, output may drop in FY 2012-13

KARNATAKA(Scrap Monster): The world's third-largest iron ore exporter India's exports may drop 75% this financial year, mainly due to low global prices which makes exports fall and mining operation restrictions in India's southern state of Karnataka western state of Goa.

Lingering restrictions are imposed on the southern state of Karnataka and a complete ban on iron-ore mining imposed earlier this month in the western state of Goa.

International iron-ore prices will likely be supported by reduced exports from India, which hit a three-month low earlier this month of $86.70 per ton due to weak demand from China, though prices have recovered to around the $100/ton level since then.

Due to the mining bans in top producing states of the country and slower MoEF clearances, there is chance in the reduction of output to 140 million tons (mt) in 2012-13, an 18 per cent decline year-over-year.

A similar production level was seen earlier during 2004-05. It had peaked in 2009-10 to 220 mt.

For the financial year ended March, the domestic production of iron ore was estimated at 170 mt, a decline of 20 per cent year-on-year. The country exported 60 mt in FY12, down 39 per cent year-on-year.

India’s iron ore reserves are estimated at 7 billion tons. Most of India’s iron ore production (over 95 per cent) is in the states of Odisha, Karnataka, Chhattisgarh, Goa and Jharkhand.

Public sector companies like NMDC and SAIL produce 25-30 per cent of India’s output. The balance is from the private sector including companies such as Tata Steel.