The six-member committee of top level secretaries set up to deliberate on iron ore exports has framed a draft policy less than a month after it first met. It has recommended capping exports of ore — both lumps and fines — of 64 per cent or higher iron content at current levels for the next three years. The draft says this will be reviewed at the end of three years.
However, the panel has not been able to take a consensus decision, mainly on future export policy. The steel secretary wants exports to be cut gradually and, eventually, stopped.
But the commerce ministry wants the decision to be taken keeping Chinese demand in sight. According to its projections, spot demand for Indian iron ore would fall as Chinese steelmakers sign long-term agreements (LTA) with Australian and Brazilian miners. Therefore, it feels there would be no need to taper down exports.
Today, 80 per cent of India’s iron ore exports to China is through the spot market. Also, most of it is fines. Steel plants usually prefer to use high-grade lumps. And 80 per cent of the ore is exported from Goa and Karnataka.
The steel secretary wanted the policy to allow ore exports from Goa and Maharashtra’s Redi region. JSW is the only large steel mill in the Goa-Karnataka region. So, unless the ore is exported, it would remain unused. Steel plants, most of which are in eastern India, get the ore they need from mines in Orissa, Jharkhand and Chhattisgarh. The commerce ministry differed on the ground that regional differentiations were not justified and any policy must be uniform.
Given the varied and even conflicting interests of the stakeholders (miners, exporters and steel makers) it may be a while before the dust settles on this issue. Yet, whatever the final outcome, the policy laid out by this committee should provide some direction to an issue that has been mired in uncertainty so far.
Pallavi Roy in Businessworld
