Iron ore exporters caught in infra bind

Industry fears India will lose its market share in China.

Iron ore exporters have voiced fears of India's rapidly dwindling presence in China in two to three years if the government does not improve port and rail infrastructure immediately.

Till 2006-07, India was the second largest iron ore exporter to China with 78 million tonnes which accounted for 25 per cent of that nation's total imports (325 million tonnes).

However, during the first nine months of this financial year, Brazil overtook India to become the second largest supplier of iron ore to China.

While India exported 61 million tonnes, Brazil exported 73 million tonnes. China imports iron ore from 34 countries, with Australia, Brazil and India accounting for 85 per cent of the imports.

"India will further lose its market share in China and will fall below the 20 per cent mark if ports and rail infrastructure are not improved, " Basant Poddar, senior committee member, Federation of Indian Mineral Industries (FIMI), said on Tuesday.

China plans to import 403 million tonnes in 2007-08 to produce steel for the domestic and world markets.

"The opportunity for growth is tremendous. Chinese mills prefer Indian iron ore because of the geographical proximity and timely delivery. Though we are in a position to meet the demand, we are not able to make the supplies on account of poor transport infrastructure," he said.

The iron ore mines located in the western part of the country - Goa, Karnataka and Maharashtra - account for more than 60 per cent of overall exports (92 million tonnes). Iron ore is exported from Mormugao and Vasco in Goa and Mangalore and Karnataka's Belikeri and Karwar ports.

"None of these ports have properloading facilities. As a result, vessels are being loaded midstream thereby spiralling costs upwards. Besides, this type of loading is not preferred for iron ore."

Former FIMI president V Pichamuthu pointed out that Brazil was constructing vessels of 400,000 to 500,000 tonnes capacity to bring down ocean freight costs.

"Australia is rapidly ramping up its rail, port and mine facilities to cash in on burgeoning Chinese demand. The polices in these countries are export friendly. We have been urging the Centre and states to improve the facilities at ports for the last 10 years. But nothing has materialised," Pichamuthu added.

He said China is the only country which is importing Indian iron ore of as low as 52 per cent grade and fines.

"The bulk (75 per cent) of exports from India comprises fines, which do not have demand else where. Also, 70 per cent of the exporters rely on spot trading. If we do not meet the demand from China, our market share will dip automatically," he said.