China feels Bellary ore is too costly

BANGALORE: The ripple effect of this year's Union Budget will be felt strongly in the mining district of Bellary.
China, the largest consumer of Indian iron ore, has threatened to boycott the imports from India as it feels the Rs 300 per tonne export duty imposed by Union finance minister P Chidambaram is way too high.
The duty, the Chinese lament, will make the Indian ore costlier than Australian or Brazilian imports.Yan Bangsong, deputy director, China Chamber of Commerce of Metals, Minerals and Chemicals, has said: "Chinese steelmakers are forced to pay an additional $500 million on existing deals as Indian suppliers are demanding a higher price to cover the duty hike. Naturally, they would prefer iron ore from Australia or Brazil to meet the shortfall."
India is the third-largest supplier of iron ore to China, exporting 66 million tonnes and constituting 22% of the Chinese demand, with Brazil and Australia making up the rest.
A large chunk of the iron ore goes from Bellary in Karnataka, putting the mine owners there in jeopardy. Since 2000, the district has exported (free on board) more than 5,500 million tonnes of ore, worth nearly Rs 25,000 crore. Some 35 companies are involved in exports.
Besides, the state-owned Mysore Minerals Ltd possesses six leaseholds of 486.39 hectares here, producing 59 lakh metric tonnes of iron ore. Government sources said Chidambaram has aimed at meeting the rising demand for iron ore within the country.
"He also wants to discourage the use of Indian ore in the Chinese steel industry, which directly competes with Indian steel," sources said. A section of the industry is confident that China cannot avoid Indian exports, as there is a shortage of iron ore worldwide. "India can supply the ore within a week, while it takes about a fortnight to a month to get the supplies from Brazil and other countries," a source said.
A recent analysis by Macquarie Bank Ltd, a leading Australian bank, has stated predicted that China will import larger amounts of steelmaking ingredients in 2007 and 2008. There will be a spurt in Chinese industrial production with the increase in infrastructure spend, in part due to surplus liquidity, it has said.