The Telegraph
Wednesday , January 15 , 2014
CIMA Gallary

Rethink on iron ore exports

Strategy shift

New Delhi, Jan. 14: India is likely to reconsider an option it had rejected 10 years ago — ban the export of iron ore unless it’s converted into a value-added metal.

Earlier this week, Indonesia stopped the export of unprocessed mineral ore, forcing global miners to announce plans to set up refineries in the mineral-rich but industrially poor nation.

Top officials in the steel ministry and Planning Commission had a decade back argued that allowing Bellary-Hospet’s mineral riches to be exported to China without any value addition would mean losing out on domestic job creation. Besides, exporting costlier iron pellets or steel will fetch higher revenues.

Top officials, who said they would study the impact of Indonesian President Susilo B. Yudhoyono’s decision on investment and export valuations, had 10 years back opposed the removal of a cap on the sale of high-grade iron ore lumps and fines from Bellary-Hospet and Bailadilla mines.

Importers of ore from the country lost out when the cap was not removed. Keeping them in mind, the then ruling NDA cabinet was presented with an alternative note, which proposed encouraging those who wished to import ore from India to set up iron pellet making or steel-making capacity here.

This proposal, too, failed to materialise.

Officials had also argued that ore exports to China, if allowed, should be linked to barter deals for high-grade coal from that nation in view of the huge amount of money the country is projected to spend on the import of the fuel in the coming years. By 2012-13, India spent $18 billion to import 137 million tonnes of coal compared with a couple of million dollars 10 years back.

After the Congress-led UPA government took over, a rethink on the old policy started. Once again the mining lobby had their way, leading to the continuation of the policy to allow ore export. Rules said only fines and lumps with low-grade iron would be allowed to be exported. However, in reality high-grade iron ore kept being shipped out of the country, with 80 per cent of it headed towards China. This was later exposed by Supreme Court-appointed committees.

China’s steel-making capacity doubled to 800mt a year within 10 years based on ore imports from India, Indonesia, Australia and Brazil.