The iron ore ban in Karnataka and Goa has impacted production between 2010 and 2013. At last count, India's iron ore production fell to 140 million tonnes from 219 million tonnes in 2010. Exports fell to almost one-fifth of the over 100 million tonnes in 2010. The Supreme Court (SC) on Monday allowed mining in the top iron ore exporting Goa state with an upper limit of 20 million tonnes per year.
In FY2010 India exported 117 million tonne of iron ore. At that time, average rates were between USD 130 and USD 150 per tonne, so India made approximately USD 16-17 billion. The fall in exports has been witnessed ever since that year, but in the first year the fall was more because of less global demand. Over a span of four years, the iron ore exports fell from 117 million tonne to 18 million tonne and by then prices of iron ore had also declined. Net earnings slipped from about USD 16 billion in FY10 to USD 2 billion in FY13.
Percentagewise, USD 18 billion would be nearly 4 percent or 3 percent of the total export basket of over USD 325 billion at that time. Now, at USD 2 billion it will be perhaps 1 percent. Yes, there has been a fall in exports, but in percentage terms it is 2-3 percent of the export basket.
Meanwhile, the Federation of miners’ head, RK Sharma and the Secretary of the Directorate of Mines, Prasanna Acharya told CNBC-TV18 that it could at least take one year for all the permissions to be in place and then even another year for mining to restart . In Karnataka, it has taken that long, maybe in Goa it will be a little faster because the state government is proactive, but restoration of normalcy is likely up to at least 12-18 months.
The impact on the export earnings would be as low as about USD 4 billion. Taking into consideration the current iron ore prices, current economic development and economic growth globally, the net loss would work out to about USD 10 billion, which is nearly 2 percent of the export earnings.
However, the important point to note is imports didn’t get encouraged because of this ban. A large part of the exports out of India is not seen as very useful for the Indian steelmakers because of low FE (iron) content.
Source:- moneycontrol.com
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