Date:23/07/2005 URL: http://www.thehindubusinessline.com/2005/07/23/stories/2005072302730900.htm

Back Centre reviewing iron ore export policy
'Exports may be 25-30 pc lower this fiscal'

Ambarish Mukherjee

New Delhi , July 22

EVEN as the Government is reviewing the export policy on how much of iron ore should be allowed to go out of the country, informed sources in the Government told Business Line that exports could be 25 per cent to 30 per cent lower this fiscal.

According to rough estimates by the Government authorities, iron ore exports are expected to be a little over 60 million tonnes this year, down from around 78 mt in 2004-05 against a total production of 145 mt.

The main reason for the expected decline in exports is because spot prices of iron ore have come down by around 30 per cent during the April-July period, despite the fact that some of the largest iron ore producers in the world such as CVRD of Brazil, Rio Tinto and BHP Billiton effected a steep hike in their long-term contracts for the current financial year. Adding to the woes are the falling Chinese demand.

Official sources said that an Indian team of iron ore exporters, including officials from National Mineral Development Corporation (NMDC), Kudremukh Iron Ore Company Ltd (KIOCL), and a few more private parties are in Beijing, negotiating iron ore prices with Chinese buyers.

While the Indian companies had offered a price of $55 per tonne of iron ore, the Chinese buyers are insisting on a price of $43 per tonne. "Moreover, even at the lower price Chinese companies are not ready to enter into even six months contracts, anticipating that prices may fall further," industry sources said.

On the other hand, the Government's internal review of the iron ore export policy is being subjected to the conflict of interest between the Ministry of Steel and the Commerce Ministry.

Official sources said that Ministry of Steel is in favour of curtailing iron ore exports on the grounds of preserving national resources and also under pressure from the domestic steel industry.

But the Commerce Ministry is against any such curtailment because its effort is to boost the total export performance.

"The Commerce Ministry has told the Steel Ministry to justify its case so that the Commerce Ministry can, if necessary, clamp down on iron ore exports," officials said.

Meanwhile, the import-export figures of finished steel for the first quarter have been released by the Joint Plant Committee (JPC) under the Steel Ministry. According to estimates, finished steel imports during the first quarter increased to 5.4 lakh tonne against 4.48 lakh tonne during the corresponding quarter last fiscal, marking an increase of 20.5 per cent. Exports during the quarter stood at 8.75 lakh tonne against 9.35 lakh tonnes during the corresponding period of the previous fiscal.