Indian iron ore mining industry is under threat of losing business from Chinese buyers,who have started identifying substitute suppliers. The development comes in the wake of Karnataka government’s decision to ban iron ore export. Katnataka accounts for 30% of the country’s iron ore exports.
Australia and Brazil,who are strong global players in the market,now pose a threat nibble away Indias ore business. This could spell doom for the industry in India,say analysts. The Karnataka ban has come at a time when China has been trying to regulate imports of low-grade iron ore. The Chinese government has restricted traders from importing low-grade iron ore through a ruling from the China Iron and Steel Association (CISA). Chinese steel companies have not stopped importing low-grade iron ore from India yet,as the local crude steel production has been increasing steadily. Karnataka,which banned iron exports last month to curb illegal mining,owns iron ore reserves of 9 billion tonnes. Of this,around 7 billion tonnes is spread in the eco-sensitive Western Ghats. Only two billion tonnes could be mined. The state produces about 40 million tonnes a year,of which only 10 million tonnes,have been consumed by the local plants.
D V Pichamuthu,director,south,for Federation of Indian Mineral Industries (FIMI),said the exporters will lose their Chinese customers permanently if the ban is not lifted in Karnataka immediately.
He said around 90% of iron ore exported from India is lower grade fines that cannot be used by the Indian steel mills. China buys 95% of the iron ore exported from India.
Jeffrey Landsberg,an analyst attached to a New York-based Commodore-Research,told FE that India could suffer on account of the new developments. We have predicted and are already seeing China import much more iron ore ore from Australia and Brazil as a result of the ban.
Landsberg said the ban on iron ore exports will not only stop all exports from ports in Karnataka,but also significantly restrict exports from ports outside the state.
Chinese companies mix the low grade iron ore fines (58% grade) imported from India with the high grade ore with 64-66% content imported from Brazil and Australia.