Indian bauxite exports rejig estimated in 2017 after sharp decline in 2016

As per data released by the Indian Bureau of Mines in the latest edition of India Minerals Yearbook 2015 (published in January 2017), the total value of exports (including re-exports) of ores and minerals at INR1,78,077 crore accounted for 9.4 per cent of the total value of all merchandises exported from India. The value was down by 8.58 per cent from the corresponding period previous year.  The value of total bauxite exports from the country, estimated at INR 14.05 billion, more than doubled in the period under review.

In 2015 alone, India exported 8.11 million tonnes of bauxite worth US$488.4 million. In 2016, the export volume almost halved to stand at 4.12 million tonnes and was valued at US$149.8 million. The bauxite export industry in India experienced the setback due to the high custom duty imposed on the export of the mineral ore. In the last budget, custom duty on bauxite export was reduced from the earlier 20 per cent to 15 per cent, but even that failed to rejuvenate the trade. The reduction in custom duty proved to be clearly inadequate for livening up the sector which has already been battling strong headwinds from the meltdown in global commodity markets.  

Indian bauxite has also lost its market to countries like Malaysia, Australia, and Guinea over the last two years. China being the largest consumer of aluminium and a significant producer of the metal, yet a resource-poor country, relies heavily on bauxite imports. But over the last two years it has been purchasing less bauxite from the Indian bauxite suppliers. As per latest data, Indian Bauxite comprises only 14 per cent of the Chinese bauxite import requirements. This changed predilection of China for lower priced bauxite over high-quality, higher-priced Indian bauxite has resulted in a substantial threat for Indian bauxite exporters.

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In 2017, however, India’s bauxite export is expected to improve significantly. Till August, the country is estimated to ship around 4.48 million tonnes bauxite valued at US$169.7 million, against 2.05 million tonnes recorded last year. The value of exports till August 2017, however, is estimated to decrease 75.1 per cent year-over-year.

India's aluminium producers are already pitching hard to the Government of India to either ban bauxite exports or raise exports duty to 50 per cent. The proposal to ban exports of bauxite, the key raw material in aluminium production, is one of the flagship demands of the domestic producers in the run up to the 2016-17 Budget.