Ban on iron ore exports from Karnataka and Goa has significantly impacted Indian Railways' freight revenue from the segment, and it has projected just about 3.77 per cent growth in income from the movement of the mineral in 2013-14.
After coal, iron ore is the second biggest contributor in Railways' freight earnings. While coal accounts for over 40 per cent of its total freight revenues, iron ore is at about 10 per cent.
The Railways has projected to earn Rs 93,554 crore from freight carriage next fiscal year.
According to Railway Budget documents, its revenues from carrying exportable iron ore is estimated to fall drastically, by over 56 per cent in the current fiscal, to Rs 1,132.36 crore, compared to Rs 2,585.41 crore in 2011-12.
In the next fiscal year, it is expected to decline further by over 4 per cent to Rs 1,084.79 crore, the documents showed. This has also led to a meagre growth projection of 3.77 per cent in its iron ore freight revenues at Rs 8,214.20 in the next fiscal year.
The projection is despite a hike of 5.78 per cent in freight rates from April for carrying the mineral domestically, as announced today by Railway Minister Pawan Kumar Bansal. He also proposed to link the freight charges with fuel costs and review of the rates twice in a year.
In 2012-13, the Railways is estimating 6.81 per cent growth in total iron ore revenues at Rs 7,916.10 crore.
The iron ore sector is struggling to cope with several issues presently including illegal mining and ban on mining in Karnataka and Goa. While ban on mining in Karnataka was imposed about one and half years back, mining in Goa was banned in October last year.
When asked for comments on the freight hike, industry officials said that it will be passed on to the consumers as the iron ore industry cannot absorb the burden.
"Impact of freight hike will be passed on to consumers. What other options do we have," Sesa Goa's managing director, P K Mukherjee, said. Sesa Goa is the largest private sector iron ore miner in the country.
He also lauded the move to link freight rates with fuel costs and said that it will bring transparency in pricing as the consumers would now know the "cost and its impact".
"We welcome linking the freight rates with fuel charges," Industry body FIMI's secretary general, R K Sharma, said, but expressed disappointment that government has not reduced the freight rate for iron ore, which is meant to be exported.
Currently, carriage of exportable iron ore costs about Rs 2,700 per tonne, four times more than the charges for domestic movement of the mineral, he said.
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