Iron ore exports from Vizag Port may fall further

Iron ore exports from Visakhapatnam Port may fall further during the next fiscal because of the government's decision to cut down ore exports from the country to encourage the local steel industry.

The port is already facing a shortfall in iron ore exports this fiscal, and with the government's latest decision, the ore exports may further fall.

State-owned MMTC Limited has been exporting iron ore to Japan from this port for the last 30 years and over the last three-four years, several other private players have been using it to export iron ore to China and other countries.

The port has seen a steady decline in iron ore handling. In 2004-05, the port handled 134.22 lakh tonne of iron ore. This dropped to 129.58 lakh tonne in 2005-06 and further slipped in the fiscal 2006-07.

During the current year till March 15, the port handled only 98.40 lakh tonne. The figure is expected to touch only 101-102 lakh tonne by the end of March. Thus, there is a possibility of a shortfall of about 26-28 lakh tonne compared with the last fiscal.

"The government's decision may affect ore exports. But the impact will be very marginal because we are mostly handling coastal cargo, so a drop in ore exports from the country will not severely affect the port. On the other hand, ore pellets handling has been gradually increasing from the port," K S D Dattu Raju, traffic manager, Vizag Port, told Business Standard.

Essar group's Hy-grade pellets plant located near the Vizag port has been gradually increasing transportation of iron ore pellets. In 2001-02, the port handled only 15.55 lakh tonne of pellets, whereas the cargo has increased to 30.29 lakh tonne in 2005-06, and in the current fiscal it may cross 45 lakh tonne.

"We have handled 41.6 lakh tonne of ore pellets until March 15. In the next 15 days, another 4-5 lakh tonne of pellets will come to the port," Raju said.

The deep draft Gangavaram port, which will start operations by the end of this fiscal, is creating latest facilities to handle ore. Keeping the development in mind, Vizag port is also upgrading its ore handling facility at an investment of more than Rs 200 crore.

After completion of the project, the capacity of the port's ore handling complex (OHC) will increase to 16-18 million tonne from the existing 12 million tonne. Japan Bank for International Cooperation has agreed to finance the project, and the port is waiting for the approval of the Planning Commission to commence work on it.

According to the upgradation plan, the port will strengthen the existing iron ore berth and deepen the channel up to 18.1 metres from the existing 16 metres, which can accommodate up to 2 lakh DWT (deadweight tonnage) vessels.

The port has also proposed to increase the iron ore stockyard capacity in OHC, set up new tipplers, stackers, bucket wheel reclaimers and ship loader to increase the loading rate.

The port currently loads 50,000-55,000 tonne of iron ore per day. Post modernisation, the loading rate will go up to 75,000-80,000 tonne per day.