Vaman Kumar, an industry expert associated with Nordbell Commercial Limited briefly reviews the future of Iron Ore Trade after the lifting of ban in India.
Followed by the pleas to restart iron ore mining in Goa, the Supreme Court finally lifted the complete ban. Ban on extracting iron ore in Goa is lifted, but mining activities may be resumed only on the issuance of fresh leases, declared by the Supreme Court. 37m tons of total 208m tons of iron ore production in India came from Goa in the year ending April 2011, but ban in 2012 halted all the exports from the state and neighbouring state of Karnataka, cutting down on India's 117m tons exports in 2010 by a whopping 85%. The ban on iron ore production was imposed to curb illegal mining in Goa.
Supreme Court's decision to lift iron ore ban in Goa provides a ray of hope to thousands of workers thrown out of their jobs after the court had shut down mining in the state. The ban also had implications on the economic slowdown and low growth in manufacturing, further affecting mining in Karnataka and Odisha as well. Lifting of the Goa mining ban can help in bridging the Current Account Deficit. Projected resumption of Goa iron ore mining will be a good support to boost foreign trade figures.
Unfortunately, lifting of the iron ore ban may not bring the boom in economy as many exporters are projecting. Competition is still fierce globally, and grade is increasingly becoming a critical issue in the iron ore exports. India has to go a long way in catching up with the competition posed by the leaders. Moreover, since grade beats quality, Indian exporters may have a tough time finding Chinese buyers for their low grade iron ore. Supreme Court's cap of 20m tons now seems to be less a cap and more of a tough target for the year ahead.
Therefore, though lifting of iron ore ban might seem to be a boost to the Indian economy, it may not be able to bridge to meet export deficits and growing demand for high grade iron ore globally.
About Vaman Kumar
Vaman Kumar, is an an industry expert in the field of international trade and global commodity trade especially in the field of iron ore trading. He has been associated with Nordbell Commercial Limited and his interests include Metals, Minerals and Energy in Commodity Trading, International trade, Banking, Finance and Credit and Risk Management.