Indian Railways’ gains from iron ore export halves

The Indian Railways’ revenues generated from transporting iron ore meant for exports has declined sharply in recent times, and in 2012-13, it raked in about Rs 1,311 crore which is half of what it had earned last year, with the railways ministry expecting further dip in revenue this financial year.

Since 2009-10, the volume of iron ore carried for exports has gone down by 87.5% caused by a dip in export of iron ore from the country. In fact, exports have dropped to one-sixth the level since 2009-10 to just 18.37 million tonnes.

Railway officials and analysts attribute this to a combination of a drop in global demand, especially China’s appetite, as well as a clampdown in iron ore mining in belts like Goa, Karnataka and Odisha.

“Apart from our domestic issues, it’s mainly on account of a fall in demand in countries like China. Their demand had surged when they were building infrastructure before the China Olympics. That has now fallen,” said a railway ministry official.

Zonal railways like the South Eastern Railways (SER) – half its commodity basket is made up of iron ore transport – carried only 3.48 million tonnes of iron ore meant for exports in 2012-13.

In 2009-10, it was over five times this amount.

“We have no control over exports but because of the impact of lower iron ore exports, we are now trying to transport more of other commodities. Last year, we loaded more coal and cement as well as iron ore meant for domestic industries,” said an SER spokesperson.

The East Coast Railways, though it transports less iron ore than SER, has also been impacted with the proportion of earnings generated from iron ore booked for exports falling to only 20% of the total revenue from the total iron ore booked. In 2009-10, this figure was 39.1%.

“There is an export ban in Goa and the mines are closed. In Karnataka, export has not started whereas in Odisha, exporting is not viable. There is a 30% export duty and the railways freight for iron ore export is four times that of the domestic rate,” said RK Sharma, secretary general at the Federation of Indian Mineral Industries ( FIMI).

Published in: on May 30, 2013 at 4:21 pm  Leave a Comment  
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