Chrome ore exports to flourish despite duty hike

Higher prices, better realisations may boost overseas sales by 10%.

Despite an export duty hike of Rs 1,000 per tonne of chrome ore this budget, the industry estimates a 10 per cent rise in exports as the margins are still better than domestic sales. 

BULLISH PROSPECT
	Imports		Exports
	Tonnes	Value  (Rs cr)	Tonnes	Value (Rs cr)
2004-05	2521	3.40	1116644	799
2005-06	5100	6.20	692673	632
2006-07	4801	6.70	1203060	794

The industry produces 3 million tonnes of the mineral, out of which more than 1 million tonnes are exported in the form of ore and concentrates.

The value of chrome ore exports stood at Rs 793 crore last financial year (FY07) which is likely to go up to Rs 840 crore in the current financial year because of demand and higher prices.

During the January-March quarter this year, the price of chrome ore has gone up by $100 to $510 a tonne (free on board or fob) from $410 fob because of a huge spurt in demand from the infrastructure sector, especially malls, multiplexes and stadiums.

"We had demanded the export duty to be raised from Rs 2,000 to Rs 5,000 a tonne in the pre-budget memorandum but a partial rise in export duty has had a negative impact as the global price has spurted by 25 per cent in the last quarter, negating the hike," R K Saraf, chairman, Indian Ferro Alloy Producers' Association (IFAPA), said.

Hence, the domestic stainless steel industry continues to struggle, he added. Chrome is an important input for making stainless steel. "Despite India being a large producer of chrome ore, the country relies on imports."

According to IFAPA estimates, total imports are likely to rise to 100,000 tonnes in FY08 as against 67,817 tonnes last year.

The demand for chrome ore by the ferro chrome industry is expected to be around 2.7 million tonnes by 2011-12, according to industry estimates.

Thus, chrome ore output needs to be protected for long term use. If exports continue, the reserves of chrome may deplete in another 10 years considering the present rate of ferro chrome production, the industry fears.

In case exports are banned, the existing reserves could meet the domestic industry's requirement for about 30 years.

The total resources of chrome ore, according to the Indian Bureau of Mines (IBM), as on 1-4-2005 are estimated at 213 million tonnes. Of these, the proven reserves are about 66 million tonnes.

Chromite deposits in India are less than 1 per cent of the world's known resources, as against 71 per cent in South Africa, 19 per cent in Zimbabwe and 7 per cent in Kazakhstan.