India's Biggest Iron Ore Producer Just Fired A Shot Across China's Bow

Discussion in 'Economy & Infrastructure' started by LETHALFORCE, Jan 12, 2011.

  1. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    http://www.businessinsider.com/orissa-india-iron-ore-china-2011-1

    Orissa, India's biggest iron ore producer, has put through a proposal to the central government to place a ban on exports in order to protect its domestic market, according to Reuters. If the proposal goes through, China which gets about 100 million tons from Indian annually, will be the country hardest hit.

    The state government has asked Orissa, which is state owned, to keep 70% of its iron ore lumps and 80% of its chromite ore for local use, according to The Economics Times. The state of Karnataka also banned exports in July last year to deter illegal mining.

    China relied on India for about 20% of its iron ore imports in May which dropped to 6.4% after the Karnataka ban according to China Daily.

    Global prices have already been affected by a dip in coking coal supplies from Australia. Floods in Australia have cut 5%, or about 14 million tons, of global coking coal supplies, according to Reuters.

    Iron ore costs have more than doubled in the last two years because of rising demand in India and China. Prices in China are now expected to soar an additional 7% this quarter according to Bloomberg.

    Read more: http://www.businessinsider.com/orissa-india-iron-ore-china-2011-1#ixzz1Aq8n29If
     
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  3. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    India Orissa state wants export ban on iron ore-min

    BHUBANESWAR, India Jan 12 (Reuters) - India's eastern Orissa state is seeking a ban on exports of all iron ore grades and the proposal is likely to be sent to the federal government in a month, the state's steel and mines minister said on Wednesday.

    "We have to get the approval from the finance department and the chief minister. Then we will send a specific proposal to the government of India," Raghunath Mohanty told Reuters.

    "It may take fifteen days to one month's time maximum," he said. (Reporting by Jatindra Dash; Editing by Aradhana Aravindan)
     
  4. Iamanidiot

    Iamanidiot Elite Member Elite Member

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    Extremely good thing Visakhapatnam Steel Plant has been operational since 1987 and till date the government has not assigned its own iron ore mines such is the GoI lethargy.The VSP folks really have a tough time because of this handicap and this steel plant is the largest producer of steel in the country,blooms,billets and coils limited
     
  5. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    Great move. We should be focusing on our local consumption for national development rather than letting a few pesky companies earn billions at the cost of local consumption.
     
  6. SHASH2K2

    SHASH2K2 New Member

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    If I am correct then SAIL bokaro steel plant has highest steel production capacity. It has 6 blast furnaces and Vizag has 4 blast furnaces. actually bokaro steel plant was supposed to have 10 blast furnaces but Biju patnaik decided to move 4 remaining furnaces to Vizag after problem with a local leader named smaresh singh regarding compensation to displaced locals . Now back to the main point its a wise move with aim to conserve resources for future.
     
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  7. pmaitra

    pmaitra Moderator Moderator

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    Good move.

    Yet another thing to factor in is that rising Iron Ore prices will slow down infrastructure development in PRC. Sweeeet! In fact, India should simply place as many road-blocks when it comes to export of Iron Ore, which is a strategic mineral, especially if the export is to PRC.
     
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  8. no smoking

    no smoking Senior Member Senior Member

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    A wise move? Maybe. All the results only affect india: moving profit from miner to steel producer. That is all.
    Slowing down infrastructure development in china, I doubt it. Buying from india or Australia, brazil etc makes no significant difference for China steel industry.
     
  9. pmaitra

    pmaitra Moderator Moderator

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    Exporting iron ore will fetch revenue but exporting cars, railway wheels, bridge strusses will generate more revenue. If we export iron ore, the importer will use them to create some finished products. That will create jobs there. If we stop export of iron ore and only allow finished products, we generate jobs here.

    If PRC thinks it is better for them to import from Brazil or Australia, then so be it. If, as you say, it makes no difference to PRC, then all the best to you. You should consider the distance between India-PRC and Brazil-PRC. You see, shipping companies do not offer free shipping services. :D
     
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  10. Yusuf

    Yusuf GUARDIAN Administrator

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    PM, transpiration cost is negligible compared to material cost. So it may will not make any difference to china. But yes I am a big believer of saving Indian resources for now to be used 30-40 years later when others dry up. Use only as much is required for our industry. Forget exporting anything. May be don't use any at all and import all. It will pay dividends. We have to start to look to preserve resources for the future. Mankind will probably last only another 100 -150 years to the max the way we are eating up all resources and fighting each other. Keep some for the last 50-100 years.
     
  11. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    This was waiting to happen, finally the balls have set rolling, there are lot of steel plants which are on expansion mode, we need to provide them with enough reserves to operate. My only worry is coal, India have lot's of coal, but not of high grade. We largely import them, so need to create more suppliers.
     
  12. pmaitra

    pmaitra Moderator Moderator

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    Since you are in the metal related industry, you know better than I, so I will take your word for it.

    We are importing coal from Australia already. We are not using the coal that we have because of (1) low grade and (2) depth. I am sure if cost of coal goes up then we will harness the low grade coal, process them through pyrolysis and use them.

    I think many of us agree that we need to stop or limit export of our iron ore.
     
  13. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    ^^
    Pmaitra, I am advocating of fuel bank in the line of natural Uranium for us, we have lot of Uranium, which is not mined at all. And we are importing and creating fuel bank. Although coal will take lot of space as compared to Uranium, but some thing has to be done for coal, we can keep something like 10 year of coal extra as reserve.
     
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  14. Yusuf

    Yusuf GUARDIAN Administrator

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    Steel products cost say about $1000 a ton. One 20' container costs $20,000. To transport that, depending on the season traffic varies between $500-2000 per container. Do the math. At best 1%. this is for steel.

    Percentage will be a little higher for iron ore but still insignificant in the difference between transporting from brazil or from India.
     
  15. pmaitra

    pmaitra Moderator Moderator

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    Yes, that is a great idea. In fact, we should have good reserves of all strategic minerals. We need to define what are strategic minerals and also rank them according to their importance.

    I wonder if there is any method that does not need coal or can use small amounts of coal for making steel?
     
  16. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    ^^
    With new techniques, the amount of coal needed to produce steel is decreasing constantly, but as of now this is the primary medium. I heard of using EM induction to generate enough heat to melt the ore, but not sure how it works.
     
  17. pmaitra

    pmaitra Moderator Moderator

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  18. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    India keeping more iron ore at home - The Globe and Mail

    India keeping more iron ore at home

    India’s iron ore exports, which fell for the first time in a decade last year, could halve over the next five years as the country feeds the expansion of its steel industry.

    Lower shipments from the world’s number three exporter should help bolster prices that have already more than trebled from late 2008, as massive increases in global supply are only expected to come through by 2015 and demand from top consumer China rises.

    “Indian exports are in a structural decline as resource nationalism becomes a bigger driver behind policy. The policy is definitely not encouraging exports,” said Graeme Train, commodity analyst at Macquarie in Shanghai.

    In a bid to curb overseas sales, India has raised freight rates and quadrupled export taxes on iron ore fines, the sandy material that typically contains 55 to 65 per cent iron and which comprises around 70 per cent of its annual output of about 200 million tonnes.

    Iron ore exports from India fell 17 per cent to 97.6 million tonnes in the year to March, largely due to a ban on shipments from the key producing state of Karnataka.

    Analysts in a Reuters poll forecast another drop to eight-year lows this year on increased costs and a delay in resumption of shipments from Karnataka, the source of around a quarter of India’s exports.

    Tight Indian supplies and booming Chinese demand lifted spot iron ore prices to record highs above $190 (U.S.) a tonne in mid-February. They are currently trading near $176.

    The world’s fifth-largest steel producer, India is aiming to lift output to 120 million tonnes by the end of 2012 from nearly 67 million tonnes in 2010, as the likes of steel giants ArcelorMittal (MT-N22.710.341.52%) and POSCO (PKX-N96.490.660.69%) expand their reach into Asia’s third-largest economy.

    India is looking at 8.2 per cent growth this fiscal year, after expanding 8.5 per cent last year, underscoring the need to boost domestic steel output and consumption of iron ore.

    With the expansion in its steel sector, the country’s iron ore exports are forecast to fall to roughly half of the 97.6 million tonnes shipped in the last fiscal year by the year to March 2016, said Gunmeet Singh, analyst for CRU in Mumbai.

    India’s traditional steel blast furnaces can use only iron ore lumps, but there is a growing move among steelmakers to invest in more pelletizing and sintering plants that can take the iron ore fines now mostly exported to China.

    Mr. Singh estimates that the country’s pelletizing capacity will triple to 90 million tonnes in five years and its sintering capacity will increase 55 to 60 per cent from 53 million tonnes.

    “In many ways the efforts to prevent exports of iron ore are more to support the domestic steel industry which will benefit from much lower raw material costs,” said Christopher Ellis, analyst with Metal Bulletin.

    While land acquisitions remain a big hurdle that could disrupt India’s plans, with protests continuing against POSCO’s planned $12-billion steel mill that was meant to start producing this year, there is a pending bill in parliament aimed at boosting payouts to poor villagers for industrial projects developed on farmland.

    Apart from imposing higher taxes to stop iron ore exports, India also hiked freight rates twice this year, making carriage costs for exports five times more expensive than those for ore for local consumption.

    The increased taxes and tariffs pushed the average cost for Indian iron ore to $100 per tonne, more than double the production cost in Australia and Brazil, said Mr. Train.

    “That would put Indian material at the top of the cost curve this year. They’re almost better off selling into the domestic market,” said Train.

    The higher cost slashed margins of producers, after taking out handling and shipping fees.

    “Before the tax hike, miners earned $40 per tonne, but after the tax incursions the margins have diminished to $10-$20,” said Dhruv Goel, managing director at Orissa-based Steel Mint.

    “The middle man hardly gets $1 (per tonne).”

    Indian exports also suffered from a ban on shipments from the iron-ore rich state of Karnataka, a source of around a quarter of the country’s annual exports, from July 2010, as part of the state’s crackdown on illegal mining.

    The Supreme Court ordered the ban lifted in April but that order has yet to be carried out with the state government citing procedural delays as it installs monitoring and tracking systems. Political infighting may further slow progress.

    Gavin Montgomery, iron ore analyst at Wood Mackenzie, said he expects Indian shipments to fall to 65 million tonnes by 2015, prompting big suppliers Australia and Brazil to sell more to China and non-traditional exporters to boost shipments.

    The burden of producing more to feed China’s demand rests on big suppliers Australia and Brazil.

    Brazil’s Vale (VALE-N27.550.511.87%) and Australia’s Rio Tinto (RIO-N62.471.662.73%) and BHP Billiton (BHP-N84.322.192.67%), which together control around two-thirds of global seaborne supply, are looking to boost their collective output by half to around one billion tonnes by 2015.

    That will equal China’s import demand by then as high production costs and low-quality iron ore reserves boost its purchases, according to estimates from Wood Mackenzie.

    “With iron ore prices staying around $180 a tonne, the supply can come from a lot of different sources. If Indian supply continues to disappoint, we will see continued reliance on both traditional and non-traditional suppliers,” said Mr. Montgomery.
     
  19. rudresh

    rudresh Regular Member

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    [QUOTE = no smoking]

    A wise move? Maybe. All the results only affect india: moving profit from miner to steel producer. That is all.
    Slowing down infrastructure development in china, I doubt it. Buying from india or Australia, brazil etc makes no significant difference for China steel industry. D[/QUOTE]

    yes this is typical chinese argument why should they sell for chinese at indian rates and more over if they start thinking like indians what is going to happen to chinese iron industry ok let them have a good time with the aussies or the brazil........this is going to take more than that since most of the MNC's are moving out of china to india and above this if this happens it will be a good investment for india
     
    Last edited: Aug 17, 2011
  20. no smoking

    no smoking Senior Member Senior Member

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    If one day, most of the MNC move out of China, then China's demand for steel would decline and China won't need that much ore anymore. In history, there is lots developing country tried to save their own natural resources by banning the export, which is quit natural for them. But did you see any importing country suffered seriously for this in a long term? No, because their industries would always figure out how to survive by either improve efficiency or turn to other replacing material.

    The key point here is that india steel industry cannot accomodate the increasing price of ore while chinese steel companies can. The reason they can offer a higher price than the indian competitors is they have higher efficiency. Seeking protection from gov is a positive move now. But without other improvement in technology and scale efficiency, this move itself will turn to be bad move very soon.
     
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  21. agentperry

    agentperry Senior Member Senior Member

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    just see the dumbness of policymakers that on one hand they are exporting iron ore and dont promote the steel industry. few of our so-called social activist in the name of tribal population protection comes into play and stop the project and land acquisition examples are arcelor-mittal downsizing and shifting plant, posco plant still not started after about half a decade stagnation.
    its a common phenomenon that ores are found where there was no developmental activity in the past. of course that land will be under dense forest cover and resided by tribal people. now saying that we shouldnt venture in this area then what exactly we should do?? export iron ore.. this is also not acceptable... then what... oh no may be we can just sit around and curse our govt as being in-active and corrupt yeah that will be good because we can improve our economy by ordering more posters, effigies and employ the very same tribals in protest ultimately branding all this things to the concept of India and demand separate state or nation.

    this export ban should be followed by setting up of steel plants then only we can prosper else it wil boomerang and hit us only not china or any other country
     
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