India's iron ore shipments have fallen by up to 20 per cent in the last one month following imposition of 15 per cent export duty and higher freight charges, the mining industry said today.
"Iron ore exports have become unviable for Indian miners due to the 15 per cent ad-valorem export duty, increase in freight charges and decline in prices of the ore in global market," Federation of Indian Mineral Industries (FIMI) President Rahul Baldota told reporters here.
Of over 200 million tonnes of total iron ore production, India exports about 100 million tonnes (of fines) while nearly 85 million tonnes are consumed by the domestic steel industry.
Though Baldota did not say exactly how much the exports have fallen, he estimated the drop in the range of 15-20 per cent.
According to FIMI, the apex body of Indian miners, rail freight for iron ore export has increased by almost 70 per cent in the last few months.
The hike in freight charges is equivalent to around 15 per cent of freight on board (FOB) realisation of the ore, FIMI said
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"In Karnataka alone, the number of railway indents requisitioned to ferry iron ore to ports have declined from 20,000 a few months back to just about 1,000 now," he said.
"After the recent hike in rail freight, movement of iron ore to ports is being done via road and exporters are cancelling the indents," Baldota said.
Demanding roll back of export duty, imposed by the government on June 13 to increase availability of the raw material for the steel industry, FIMI President said India stands the chance of losing a valuable foreign reserve of $10 billion if exports continue to be unviable.
Asked about the hit on operating margins of the miners due to unviability of iron ore exports, Baldota said the margins have come down to 10-12 per cent as against 30-35 per cent earlier.