In May 2022, the government imposed a 50% export tax on low-grade iron ore lumps and fines - with iron content below 58% - and a 45% export duty on pellets in an effort to meet rising local demand. Although the export tax was eliminated in November, demand for India's iron ore shipments started to gain momentum only from February 2023, R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries, told Reuters. "Exports started picking up in February because the Chinese market picked up slightly, and exports are headed only for China," Sharma said. "These are basically low grades." Between April and January, the first 10 months of the 2022/23 fiscal year, India's iron ore exports to China stood at 10.6 million tonnes, down 43% year-on-year. Supplies to Beijing accounted for 81% of New Delhi's total iron ore shipments, government data showed.
In the fiscal year to March 2022, China bought 21 million tonnes of iron ore and concentrates from India, effectively buying 80% of New Delhi's total exports of 26.32 million tonnes. Low-grade ores comprised 92% of India's total iron ore exports. Indian producers of low-grade ores largely depend on foreign markets because most major domestic steel producers use high-grade iron ores.
The country's eastern state of Odisha, India's top iron ore producer, has forecast a 50% drop in shipments this fiscal year due to the export tax imposed in May 2022. "We have already lost time from June to December, the six months that we cannot make up this year, so export will be definitely less than 50%," G. Rajesh, Odisha's director of mines, told Reuters. (Reporting by Neha Arora in New Delhi and Jatindra Dash in Bhubaneswar; Editing by Mayank Bhardwaj and Sonali Paul)
