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Showing posts with label iron ore. Show all posts
Showing posts with label iron ore. Show all posts

Friday, 4 September 2015

10:14

Indian Railway slashes Freight Rates to boost Iron Ore exports; levy Flat Distance-based Charge across all slabs

Indian Railway slashes Freight Rates to boost Iron Ore exports; levy Flat Distance-based Charge across all slabs

New Delhi: The Indian Railways has slashed the cost of transporting iron ore for exports for the first time since March 2012 by levying a flat distance-based charge across all slabs in response to “significant changes in the market”.

The new distance-based charge has been set at a uniform Rs 300 for all slabs and will be effective from September 8 for iron ore exported for production of iron and steel and cement, the Railway Board said in a circular. The revision comes as the domestic mining sector struggles to get back on its feet after a three-year lull amid a steep fall in commodity prices over the past few months. The move is part of the railways’ dynamic pricing policy , which reviews charges in step with market rates. Since March 2012, the distance-based charges (DBC) ranged from 10% to 125% of the base freight rate, plus Rs 1,125 for distances up to 700 km. The charge for distances above 700 km was Rs 1,125 earlier.

“There has been significant change in market of export of iron ore and hence the issue of DBC has been reviewed. Accordingly , the central government has accorded sanction for revising the distance-based charge leviable on booking of iron ore traffic meant for other than domestic consumption over all distance slabs,” the Director, Traffic Commercial (Rates) of the Railway Board said in the circular dated September 1, 2015.

Although the industry welcomed the revision, the decision may not have a significant impact on volumes due to the prevailing export duty.

“It is positive step and will benefit mines in the eastern region since freight rates have come down from Rs 2,950,” said R Kishore Kumar, CEO (Iron Ore Business) at Vedanta. “It will boost exports to Japan and South Korea. However, our fight still continues on account of export duty and our taxes, which are among the highest in the world.”

Between 2012 and 2015, India’s exports of iron ore plunged by over 80% to a few million tonnes from 90 million tonnes. In May this year, the export duty on low-grade ore with 58% iron content was cut to 10%, while the rate was maintained at 30% for higher grades. Prices of Goan grades of ore have crashed to $40 now from a peak of $140 in 2012, when the Supreme Court imposed a ban on illegal mining.

Reeling under subdued demand and low capacity utilisation, pellet manufacturers had sought a revision in distance-based charges while looking for ways find a market in exports.

“The initiative is aimed at reviving exports, but we do not expect any big impact due to a crash in global prices, the existing export duty and high logistics costs,” said ND Rao, chief of the Pellet Manufacturers’ Association of India, which represents interests of the industry with 90 MT of installed capacity . “The government needs to distinguish between a mined product like calibrated lump ore lumps and pellets, which is a manufactured product and attracts excise duty.”
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Friday, 28 August 2015

22:41

India to Auction 20 major Iron Ore mines to revive industry

India to Auction 20 major Iron Ore mines to revive industry

India will auction about 20 major iron ore mines this year in its first such sale ever, a top government official said, as it looks to revive its corruption-tainted mining industry.

India’s mining sector has been mired in controversy over illegal allocation of resources. Once the world’s third-biggest iron ore exporter, the country now imports the steelmaking ingredient due to a court-led crackdown on illegal mining.


The government hopes auctions will help curb wrongdoing. While it is unlikely to lead to an immediate boost in iron ore output at a time when there is a global glut, mine sales will bring India closer to its target of tripling its steel capacity to 300 million tonnes by 2025 and relying less on ore imports.

“Most of the states are in the midst of carrying out their pre-auction activities and hopefully by the end of October and November onwards they will start (auctions),” Mines Secretary Balvinder Kumar told Reuters in an interview on Monday evening.

He expects about 80 mines to be auctioned in the first phase, including limestone, gold and “about 20 iron ore mines”. States are estimating reserves, Kumar added.

India produced 136 million tonnes of iron ore last fiscal year ended March 31. About 1.5 million tonnes of ore are needed to make 1 tonne of steel, implying India’s ore output will have to more than triple in 10 years if steel companies are to be self sufficient.

Most of the iron ore mines being sold are in the southern state of Karnataka, known for its high-quality ore. This will greatly benefit local steelmakers like JSW Steel.

Led by JSW’s purchases, India’s ore imports hit a record of over 15 million tonnes last fiscal year as global prices <.IO62-CNI=SI> collapsed.

Kumar expects prices to improve by the time the mines start.

“The mining process takes two to three years because they will need all kinds of clearances: forest, environment, from pollution control board. (It) takes a lot of time to comply.”

India’s new law to auction mines instead of handing them over to private firms without competition could, however, prompt South Korea’s POSCO to scrap plans for a $12 billion steel project it agreed to set up in India a decade ago.

While a withdrawal by POSCO could dent Prime Minister Narendra Modi’s “Make in India” manufacturing push, Kumar said the government cannot change its laws for individual companies.

Kumar attended a meeting in Prime Minister Narendra Modi’s office on Tuesday to consider options for POSCO’s plans for the steel plant in Odisha state that was billed as India’s biggest foreign direct investment.

A source at the meeting said there was no concrete result from it and Odisha and POSCO have been asked to look at other options.

Odisha’s state mining company can be allotted a mine, iron ore from which can be sent to POSCO if they form a joint venture, Kumar said. Odisha has said that was a possibility but POSCO wants to see the details first.
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Wednesday, 1 July 2015

07:46

Indian Railways moves Supreme Court on dual freight policy issue

Indian Railways moves Supreme Court on dual freight policy issue

The cash-strapped Indian Railways has moved the Supreme Court in a case against its dual pricing mechanism that can open up the possibility of the transporter collecting thousands of crores additionally from iron ore exporters, who allegedly misused the facility to evade full freight charges.

The cash-strapped Indian Railways has moved the Supreme Court in a case against its dual pricing mechanism that can open up the possibility of the transporter collecting thousands of crores additionally from iron ore exporters, who allegedly misused the facility to evade full freight charges.

The railways has suffered a loss of over R29,000 crore in five years on freight earnings because of the faulty manner in which it charged for the carriage of iron ore, the Comptroller and Auditor General of India (CAG) said in its report tabled in Parliament last month. The amount, if recovered, can significantly boost the capex plans of the cash-strapped entity, which has projected a 52% jump in Plan spending for the current fiscal.
Ever since the evasion was detected in 2011, the case has been under the scanner of the Central Vigilance Commission (CVC), the CAG, CBI and other agencies. Seeking the transfer of around two dozen petitions pending before different high courts in the country against its 2008 dual pricing mechanism for iron ore, the government has challenged the Calcutta High Court’s order in December last year that upheld the railways’ policy, but restrained it from blacklisting the companies and imposing penalty on them for evading the full freight charges by falsely claiming that the iron ore they moved through railways was meant for domestic consumption.

 Source : The Financial Express.

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Sunday, 10 May 2015

09:32

Freight evasions: Top Cos gained from non-compliance of rules in booking & delivery of iron ore in UPA Regime

Freight evasions: Top Cos gained from non-compliance of rules in booking & delivery of iron ore in UPA Regime

New Delhi: In a major exposé, the CAG said on Friday that Tata, Essar, Jindal, Rungta and Kalyani were among the firms that gained from freight evasions through non-compliance with rules for booking and delivery of iron ore by railway.

The scam, spread over five years from 2008 during the UPA regime, caused a loss of more than Rs 29,000 crore to the Railways.

In its report tabled in Parliament on Friday, the CAG said the evasion of freight and non-imposition of penalty for irregular allowance of concessional rate for ferrying iron ore for domestic use were major reasons behind the monumental loss.

“The Audit Report highlights the deficiencies in compliance with laid-down rules and procedures in booking and delivery of iron ore at domestic rate by concerned Railway officials that resulted in a financial loss to the extent of Rs 29,236.78 crore,” says the report.

According to the report, there was freight evasion of Rs 12,722.65 crore and non-imposition of penalty to the tune of Rs 11,418.16 crore due to partial submission or non-submission of documents, or submission of invalid documents. Non imposition of penalty caused a loss of Rs 5,095.97 crore for diversion for trading the iron ore transported at domestic rate.

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Friday, 8 May 2015

23:19

Railways suffered huge loss over iron ore booking: CAG

Railways suffered huge loss over iron ore booking: CAG 

NEW DELHI: Railways has suffered a huge loss of over Rs 29,000 crore in freight earning due to the non-compliance of rules in iron ore booking, according to a report by the Comptroller and Auditor General of India.

The CAG in its latest report tabled in Parliament today found that iron ore carried at domestic rate but not consumed for domestic purposes and diverted for third party trading or export resulted in loss to the exchequer.

Audit has highlighted the deficiencies in compliance with laid down rules and procedures in booking and delivery of iron ore at domestic rate by concerned railway officials that resulted in a financial loss of expected goods earnings to the extent of Rs 29,236.77 crore during May 2008 and September 2013. 

Railways failed to do the needful and allowed the manufacturers to transport iron ore at concessional rates, the report said.

Iron ore is an important commodity transported by railways for domestic consumption and export. 

The national auditor reviewed the records connected with 83 major loading points over seven zonal railways and 180 major unloading points over 15 zonal railways during the period between May 22, 2008 to September 30, 2013 to check compliance with laid down rules and procedures for booking and delivery of iron ore at domestic rate by Railways and assess the quantum of freight evasion and leviable penalty due to non-compliance, if any besides detection of cases involving any diversion/removal of i .. 

Railways had introduced the dual freight policy (DFP) from May 22, 2008 as per which transportation of iron ore was categorised in two parts - domestic consumption and other than domestic consumption. "There were inherited deficiencies in the framework of the DFP for iron ore," the report said.

The DFP in effect led to freight difference between the domestic and export category, which was on an average more than three times.

Audit observed that Railways did not lay down adequate internal controls check and balances for effective implementation of DFP. 

Source : Economic Times

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