 "Iron ore exports likely to fall further in FY14")
In 2008-09, iron ore exports were at a record 110 million tonnes (mt), which have fallen to just 15 mt in the current financial year till November. The industry estimates that since government policies remain non-conducive, exports next year could be in single digit, maybe a few million tonnes.
In his budget for 2013-14 presented today, the minister has not announced any change in the freight structure on iron ore meant for exports. The railways will continue to levy differential freight rates on iron ore meant for exports and steel plants. The minister has proposed to increase freight rates on iron ore for domestic consumption by 5.78 per cent to Rs 664 a tonne as against Rs 627.7 a tonne in the current year (2012-13). By raising the freight rates, the revenue is projected to go up 5.6 per cent to Rs 3,338 crore in 2013-14 as against Rs 3,159 crore in the current year.
However, revenue earnings from movement of iron ore meant for exports are projected 4.1 per cent lower at Rs 1,085 crore next year from Rs 1,132 crore in the current year. Overall, the minister is looking at an increase of 3.8 per cent in the earnings from handling iron ore at Rs 8,214 crore as against revised estimates of Rs 7,916 crore for the current year.
The railways had increased freight on iron ore meant for exports nine times between February 2010 and March 2012. It is today roughly four times the domestic freight for iron ore at Rs 2,600 a tonne.
As a result of the differential rate, iron ore exports have become unviable, especially from eastern states. During the first eight months of this financial year, iron ore exports declined 62.3 per cent to 15 mt, against 39 mt last year.
"Unless the freight rates come down, we cannot expect any improvement in exports of iron ore. In this age of uncertainty we cannot make any projections on exports next year. For the current year, we had some contributions from Goa, but next year there is no guarantee of exports resuming from there. It would be uneconomical to export from the eastern states with such high railway freight rates," R K Sharma, secretary general, Federation of Indian Mineral Industries said.
"This is a clear indication that exports of iron ore will go down further next year. We are disappointed that the railway minister has not tried to address the anomaly in freight rates. As of now, this would not make any difference as there are no exports. But, if exports are allowed from next year, it will be a big blow to exporters and we expect single digit exports next year," Basant Poddar, managing director, Mineral Enterprises Limited, said.