India’s September Iron-Ore Exports Probably Fell 25%

By Debarati Roy

Sept. 16 (Bloomberg) -- India’s iron-ore exports probably fell 25 percent in the first two weeks of this month because of increasing royalty and transportation charges and lower demand from China, a mineral industry group said.

Overseas sales may have declined 15 percent in August from a year earlier, Siddharth Rungta, president of the Federation of Indian Mineral Industries, said today in an interview in Bangalore. India, the largest seller of iron ore to China in the cash market until last year, is losing share to BHP Billiton Ltd. and Rio Tinto Group, he said, without giving details.

BHP, the world’s largest mining company, sold more iron ore in the cash market after buyers deferred some contract deliveries. India’s overseas sales of the key steelmaking ingredient had risen in July because of the price impasse between Chinese buyers and Australian suppliers, Rungta said.

Indian enquiries from customers of iron ore dried up in the last 15 days of August, R.K. Sharma, secretary general of the Federation of Indian Mineral Industries, said on Aug. 31.

Shares of Sesa Goa Ltd., India’s biggest iron-ore exporter, pared gains after rising as much as 2.6 percent to 268.90 rupees in Mumbai today. The shares traded at 262.45 rupees, up 0.1 percent, as of 1:59 p.m. local time. The stock has more than tripled this year, compared with a 72 percent gain in the Bombay Stock Exchange’s key Sensitive Index.

Falling Prices

Iron ore prices fell after China lowered purchases last month. So-called free-on-board prices have fallen to $60 a metric ton from a peak $90 a ton in early August, Rungta said.

“Our costs, including royalty to be paid to government, have gone up,” he said.

India’s government increased the royalty it charges from companies mining iron ore to 10 percent of revenue starting Aug. 13. The government earlier charged as much as 27 rupees a ton for iron ore lumps and 19 rupees a ton for fines. Out of every 100 tons of iron ore produced in India, 60 tons are fines and the rest are lumps.

Demand for iron ore is “robust” in the long term, BHP said today in a presentation on its Web site. China and emerging nations will underpin that growth, the company said.

Iron-ore swaps for settlement this month traded at $98.26 a ton on Aug. 28, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. They indicate prices may drop to $81.81 in October.

To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net.