“There is no government policy as of now to ban iron ore trade, but it may happen automatically in view of market dynamics across the world,” said Dr AS Firoz, chief economist, Economic Research Unit (ERU), ministry of steel
Panaji: Allaying apprehensions of the beleaguered iron ore industry, a senior official of the Union ministry of steel today said the government did not intend to slap a ban on export of iron ore, but warned that the overall growth of the industry would be adversely affected in view of stiff global competition and prevailing market forces, especially the demand of Chinese steel industry in the coming years.
“There is no government policy as of now to ban iron ore trade, but it may happen automatically in view of market dynamics across the world,” said Dr AS Firoz, chief economist, Economic Research Unit (ERU), ministry of steel.
“Iron ore export, which is currently pegged at 120 million tonnes (MT), may decline to 30-40 MT by 2016, and I foresee total export volume going down at this point,” Mr Firoz told a high-profile conference on the International Iron Ore and Steel Making Raw Materials, organised by Ore Team, an iron ore and steel research house of international repute.
Observing that the steel and raw material industry was passing through a tough phase because of the economic crisis in the US and Europe, he said the Chinese economy would also come under pressure resulting in the reduced demand of iron ore. “This will also affect the growth of steel industry," he added.
Mr Firoz asserted that even if there is a demand for iron ore, its exports would be unviable in view of the unsustainable infrastructural costs. “Even if the price is $100 for per tonne of iron ore, most of the mining companies would be able to achieve only a breakeven, and this is not a great sign for Indian iron ore industry. The current road and railway freight charges would further worsen the situation, he observed.
He said Indian exports will come under significant competition from Australia and Brazil while China will not remain dependent on one country. In fact, many Chinese companies have already tied up with Australian companies as more iron ore is available globally. “Some of the projects in these countries have been delayed due to environment clearance. Within four-five years, a lot of mining capacity will be generated in the places like Australia and Brazil,” he argued.
Goa is the largest exporter of iron ore in the country. A total 54 million metric tons of ore was exported from Goa last fiscal, mostly to countries like China, Japan and Australia.
The one silver lining for the iron ore industry, however, could be spurt in demand for the domestic steel industry, but that would be possible only if the ongoing steel projects are completed in time. “If all the steel industry projects are completed in time, there would be a huge demand for the iron ore, which would restrain the exports,” the official said.
Significantly, he said the core issue for the steel industry is not iron ore but coal. “Indian steel industry may face major challenges on account of this,” he added.
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