Dr A S Firoz, Chief Economist, Economic Research Unit (ERU), Ministry of Steel said it was not the government policies but the market forces that will result in decline of the iron ore exports from the country, which is currently pegged at 120 million tons.
"It (iron ore export) would decline to 30-40 million tons by 2016," Firoz told a confernce on the International Iron Ore and Steel Making Raw Materials organised by Ore Team, an international research firm with representatives from countries like China and Indonesia. Firoz said the steel and raw material industry was passing through a tough phase and new ideas are required to steer it ahead.
"Global economies are not doing well. Chinese economy will also come under pressure resulting in the reduced demand of iron ore as it will also affect the growth of steel industry," he said. Goa is the largest exporter of iron ore in the country. A total 54 million metric tons of ore was exported from Goa last fiscal, mostly to countries like China, Japan and Australia.
In this background, the official claimed that "even if there is a demand, the exports would be unviable proportion considering the infrastructural costs. "If price is 100 US dollars (per ton of iron ore), most of the mining companies could able to achieve only a break even," he said, adding that taking into consideration current road and railway freight charges nobody would be making money.
Firoz also predicted that the long term iron ore prices would hover at around 90-100 US dollars per ton "which is not a great sign for Indian iron ore miners in the view of infrastructural cost". The official, however, said that the iron ore would be in demand for the local steel industry, provided the concerned projects are finished before set deadlines.
"If all the steel industry projects are completed in time, there would be a huge demand for the iron ore, which would restrain the exports," Firoz said, adding that the Indian exports would have to face tough competition due to investments in the countries like Brazil and Australia. "Some of the projects in these countries have been delayed due to environment clearance. Within 4-5 years, a lot of mining capacity will be generated in the places like Australia and Brazil," he said.
Firoz informed that since many Chinese companies have invested in Australia, they will either bring the iron ore to their own country or be hedging. The two-day conference is being held in Goa against the backdrop of a crisis looming large over the iron ore industry in the wake of allegations of irregularities.