High inland logistics cost makes Indian iron ore less
competitive - KPMG
Thursday, 19 Feb 2009. BL reported that India will not
likely to remain the most cost competitive source of iron ore.
This is mainly because of inland logistics cost in India is 5
times that in Brazil and Australia. Only the Goa region has a
cost of production comparable to that of global players
The FOB cash cost of production in Australia and Brazil is
between USD 15 a tonne and USD 17 a tonne, whereas in
Karnataka and Orissa it is between USD 50 a tonne and USD 60 a
The key market for India, the small steel mills is expected to
shrink due to increased pressure on margins on the steel
companies. This will force smaller and inefficient mills out
of play and due to the fact that the Chinese Government is
envisaging significant consolidation, leading to closure of
small mills and expansion of large players.