The forthcoming budget has brought the issue of iron ore exports to the center stage once again with steel industry hoping for increase in export duty on iron ore to curb exports and miners expecting withdrawal of the same to attract investments.

Indian steel makers have recently refuted claims by iron ore miners that that iron ore exports should not be restricted as it mainly comprises fines that are not being used by the domestic steel industry.

Mr Suchitra Sengupta chief economist at ministry of steel’s Economic Research Unit told TNN that “The general perception is that the Indian steel industry is using basically lump ore and therefore the fines inevitably generated in the process of mining have to be exported. The facts and figures, however, tell a different story.”

As per Economic Research Unit estimates, in 2005-06, consumption of fines in India was 41.2 million tonnes out of a total iron ore consumption of 78.95 million tonnes resulting in 52:48 ratio. As far as the large scale integrated steel producers are concerned, share of fines in total iron ore consumption at around 68% to 70%, which is expected to reach a level of 72% by 2011-12. On the basis of the technology plans of major capacity expansion projects, share of agglomerated fines both sinter feed and pellets in total burden by 2011-12 is likely to touch 85% for SAIL, 90% for TISCO and about 75% for RINL. Apart from these, some of the new major producers using alternate technology routes such as JSW, Ispat and Essar are already using close to 100% agglomerated fines in their plants.

Steel ministry estimates that the entire fines production will be consumed by the steel industry by the year 2011-12, provided the production of ore is not increased for export purpose.

In 2006-07 fiscal, India produced about 160 million tonnes of iron ore and exported about 95 million tonnes. About 85% of this export comprised fines sold largely in the spot market in China at high price. This fiscal, the export level may touch 100 million tonnes as the impact of export duty has been negated by over 100% increase in iron ore spot prices in the global market.