High export taxes and plunging prices have resulted in 12mt (million tonnes) of low-grade iron ore effectively stuck in Indian ports, given that higher grade ore is now proving more attractive to buyers. Worse still, the Indian domestic steel production market is unable to make use of low-grade ore, which has traditionally been exported to China.
Indian producers are also reeling from the 30% duty that is charged on all iron ore exports.
In 2010, major curbs were placed on the mining of Indian
iron ore as a means of stamping out illegal production. However, this had the unintended effect of sucking in 8mt of imports.
In the first two months of this year, the number of consignments shipped to India fell to its lowest since May 2009.
One report suggests that around 4mt of low-grade iron ore has been trapped at eastern ports since April, while ports in Goa have been stuck with around 8mt.