India’s share of global iron ore exports is expected to fall from 10% in 2010 to 5% in 2012 and amount to 35-40Mt.

This is largely due to the increase in tax on exported ore to 30% imposed at the end of 2011 and also rail transport rates which are 4.6 times higher for ore to be exported than that for domestic use.

Exports in the FY 2012/13 are expected to hit a low of 40Mt, a drop of 35% over the previous FY year which reached 60Mt, this itself being a decline of 40% from the 100Mt exported in FY 2010/11.

The state of Odisha (Orissa), India’s largest producer of iron ore and third largest exporter, saw an 82% decline in ore exports in January 2012 compared with December 2011, the month prior to the tax increase which was previously set at 20% for lump ore and 5% for fines. Pellet remains exempt from the duty. Duty on iron ore exports has been increased six times in the past 12 months (to March) as a means of discouraging exports and conserve production for domestic steelmakers.

China is the main export destination for India’s ore and a slow-down in the rate of growth of steel production there has also lead to a decline in Indian exports.