Iron ore exports to stay unalloyed

NEW DELHI: In a major climbdown, the steel ministry has agreed to maintain status quo with respect of iron ore exports. The ministry has informed the committee of secretaries (CoS) on export of iron ore that a thorough study should be undertaken to access demand and supply projections of steel and iron ore before taking any decision on curbing exports.

In the earlier meetings of the CoS, the steel ministry maintained a tough stand to restrict export of iron ore with a time-bound programme to eliminate exports of high grade ore to protect the interest of the growing domestic steel industry. In fact, it also suggested the committee to bring down categorisation of high grade ore from present 64% iron content to 62% for bringing in exports restrictions.

The steel ministry has informed the committee that present system of canalisation of exports of high grade ore above 64% iron content and free exports below this grade could continue, official sources told ET.

Though the CoS has failed to reach a consensus on the matter, the steel ministry’s stand now could pave the way for resolution of the issue, they added. It is understood that cabinet secretariat may set up a Group of ministers (GoM) on iron ore exports to take a final view.

The steel ministry has maintained a tough stand on iron ore exports as steep rise in steel production is estimated to increse demand for iron ore. While iron ore position currently is comfortable, the steel production is slated grow well beyond the target of 110 million tonnes (mt) by 2019-20 requiring more than 180 mt of ore for domestic industry.

In fact, the ministry has estimated that with exports iron ore reserves in the country may not last for more than 40 years. This has, however been contested by the mining industry that feels that country’s ore reserves are enough to support the industry for next 100 years or more.

The differences between the steel and mining ministries has been the main reason for the failure of the CoS to reach any agreement on iron ore exports. The commerce ministry, planning commission, department of industrial policy and promotion (DIPP) and finance ministry have all supported that there should be no ceiling or canalisation or licensing of iron ore exports.

Last year (2005-06), the country produced 150 million tonnes (mt) of iron ore with exports of 90 mt. Exports is set to cross 100 mt mark this year.