Freight costs hike scar Indian iron ore exporters

June 14, 2008

June 14th (SteelPrices India) – ET reported that a steep increase in the cost of transporting iron ore by rail is damaging India’s export competitiveness and miners complain that this may result in country ceding ground to rivals from Brazil and Australia.

Mr Basant Poddar VC of southern regional unit of Federation of Indian Mineral Industries said that the decision by Indian Railways to reclassify the freight category of iron ore meant for export has resulted in the cost of transporting the mineral rising by 45% in two months. He added that “The rising freight costs are destroying our competitiveness even as we tackle the challenges posed by Brazilian and Australian iron ore exporters who are aggressively targeting China.”

Mr Shantesh Gureddi chairman of FIMI’s southern regional office said that export in 2008-09 fiscal would be severely hit if the centre goes ahead with a plan to tax export of iron ore. He added that “Exports can easily slip by 15% to 20% if the duty is levied. Australian and Brazilian suppliers are buying large vessels to meet the Chinese demand.”

Mr Gureddi said that the decision to hike fuel prices would not impact the movement of iron ore. He added that “Currently, bulk of the movement happens by road, which is easily 20% to 30% cheaper than rail. Also transporting by rail is dependent on the availability of rakes as well as the presence of rail sidings near mines. The fuel price hike is unlikely to result in a shift in movement from road to rail.”

Further, agencies such as the New Mangalore Port Trust are proposing the introduction of a daily quota system to regulate the arrival of trucks carrying iron ore into the port.

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