Indian iron ore industry – key facts

PRODUCTION:

– India produced 226 million tonnes of iron ore in 2009/10 and exported 117.37 million tonnes.

– There are about 500 mines,half of which are operational. These mines are held by about 80 companies.

– High-grade ores with 62-65 percent iron are produced mainly in the east and south. Low-grade ores with 50-60 percent iron are produced in the west and south.

– The largest mining firm is state-run NMDC , which produces about 29 million tonnes annually,mostly for local sales.

– The steel industry is a big domestic user of iron ore. Many steel companies have captive mines.

EXPORTS:

– China is India’s biggest buyer,with its proximity helping it secure ores with low freight costs.

– The largest exporter is Sesa Goa ,a unit of London-listed Vedanta Resources .

– Other large producers and exporters are Essel Mining, Rungta Mines,V.M. Salgaocar,MSPL and Chowgule.

– Miners in Goa,on the west coast,have lower costs as mines are located near the port,and so avoid road and rail charges.

CHALLENGES:

– Exporters work under the threat of hikes in export duty every time international demand rises as the government tries to cool local prices of iron ore to help steel firms.

– In April,India raised the export duty on iron ore lumps to 15 percent from 10 percent previously. Duty on iron ore fines stands at 5 percent.

– The cost of mining iron ore ranges from $8 to $16 per tonne,but rail transportation to the port can be as high as $30. The industry has been lobbying for lower rail freight.

– Port infrastructure is poor and vessels can wait up to seven days to load cargo.

– Indian prices generally follow the global market, dominated by Australian and Brazilian miners,with China buying on spot basis for its low-grade ore needs.

* Source: Federation of Indian Mineral Industries and industry members