PRODUCT DETAILS

Metallic iron can be economically extracted from iron ore which is either in rock or powder form. The ore is usually rich in iron oxides and varies in colour from dark grey to rusty red. Usually iron is found in the form of magnetite (Fe304), Hematite (Fe203), Limonite or Siderite. Hematite also known as ‘natural ore’ traces its origin to the early years of mining, when certain hematite ores contained 66% iron and could be fed directly into steel-making blast furnaces. Iron ore is the raw material used to make pig iron, which is one of the main raw materials to make steel. 98% of the mined iron ore is used to make steel.

The annual average world production of iron ore is one billion metric tons; the larges producer being the Brazilian mining corporation – CVRD, followed by Australian company BHP Billiton and the Anglo-Australian Rio Tinto Group. Currently China is the largest consumer of iron ore and the world’s largest steel producing country.

THE IRON ORE MARKET

China continues to be the largest importer of iron ore with its crude steel output reaching over 220 million tons. International iron trade stands at a record level of 580 million tons. Brazil is the largest producer of iron ore with an output of 245 million tons closely followed by Australia which is the second largest producer and exporter. China, Japan and the Republic of Korea account for 60% of the total world imports in iron.

Sea borne trade in iron ore saw an all time new high in 2003 with a production of about 520 million tons.

OPERATIONS

With a view to conduct its own mining and export operations, the company has taken over an iron ore mine spread over 125 acres in C.N. Halli, Tumkur district and acquired 56 acres of land at Sandur taluk, Bellary district – both in the state of Karnataka in India. The mine has a potential reserve of eight million tons of iron ore fines and lumps. It is located about 240 km from Bangalore and 340 km from NMPT Port, Mangalore. The nearest railway station for C. N Halli mine site is K.V. Trosh and for Sandur mine site it is Bansandra.

As the company is in the business of trading in export and import of all kinds of commodities including iron ore, minerals and scrap steel; it also functions as contractor / sub-contractor / executor in all areas including offering consultancy services and manpower requirements in addition to investment in shares and real estate on a partnership basis.

Unique Group has logistic internal transportation arrangements and long term contracts with fleet owners and reservation in the railways to move its cargo to the port.

OPPORTUNITIES GALORE

 In spite of the global steel industry being highly competitive and cyclical; in terms of market share it is still fragmented. Presently the industry is at its peak and is passing through a consolidation phase whereby many small players in the field are likely to be acquired by the bigger ones.

The total industrial output exceeded 1.4 billion tons in 2005 and it is expected to increase further, making steel output from China the largest in the world. The steel industry in China is witnessing an unprecedented growth. While on the one hand China has been progressively raising its steel production, it has also been importing steel in substantial quantities on the other hand. This indicates that China has reached saturation point in production of steel and is likely to see more of consolidation and reorganization in the years to come.

The growth of the steel industry depends primarily on how much steel will be consumed by the developing countries. In the year 2004 it became a billion ton industry.

Unique Group has established a good reputation in the international mineral market since its foray into mineral trading in the year 2005. The company had booked export orders worth 72 million US $. The company has started accumulating stocks of over 2,00,000 metric tons at various stockyards.

SUPPLY ARRANGEMENT WITH IRON ORE MINES

Unique Group has exclusive mandates and marketing rights from iron ore mine owners in the state of Karnataka. Currently the company has long term agreements with John Mines, Milan Mines, Sowbhagya Mines, Sumukh Mines and Sun Mineral Mines located in C.N. Halli & Chitradurga in Karnataka.

INDUSTRY SCENARIO – Media Reports

China’s Iron Ore Imports to rise 11% next year – Source: The Hindu

SHANGHAI: China will import 415 million tonnes of iron ore next year, up 11% or 40 million tonnes from this year, a senior China Iron and Steel Association (CISA) official said at the 2008 China Iron and Steel Industry Development and Investment Summit held in Beijing today.

"China's increasing iron and steel output is pushing up the country's iron ore demand year-by-year. It is estimated that China will import 375 million tonnes iron ore this year, up 14.9% from last year," Luo Binsheng, vice chairman of the China Iron and Steel Association, said.

China imported 349.03 million tonnes iron ore in the first 11 months this year, up 17.3% year-on-year from last year.

Meanwhile, China's primary iron ore production is set to increase 10% from 800 million tonnes this year to 880 million tonnes in 2008 on the back of soaring domestic demand and growing prices, Luo said.

(b) PANAJI: Goa's iron-ore exporters, who are elated that iron-ore prices are all set to increase in the international market from April 1, are confident that the Chinese steel industry will continue to drive the growth in iron-ore exports from the State for at least three more years.

The exporters currently get Rs. 1,320 ($29.99) for one tonne of 62 Fe grade iron ore in leading markets in China, Japan and South Korea.
Iron ore exports from the State are poised to cross last year's record of 32.58 million tonnes.

Last year, 23.3 million tonnes of ore from Goa and 9.2 million tonnes of ore from outside the State (coming from across the border, particularly Karnataka) were exported. Goan mining companies procure ore from Karnataka, which is of a higher grade, for blending to fetch better prices for their ore.

With around 7 million tonnes of ore of non-Goan origin having been exported for the first 11 months this year, as against the previous year's figure of 9.2 million tonnes, the industry expects a marginal decline in the export of non-Goan ore in 2005-2006 owing to several factors such as continued resistance to the transportation of ore by some people on account of pollution problems, according to sources in the Goa Mineral Ore Exporters' Association (GMOEA).

While export of ore to Japan has come down by 9 per cent till February this year, China continues to drive the growth in exports with a 33 per cent increase in its intake of ore till February. Exports to China shot up from 10.32 million tonnes in 2004-05 to 13.8 million tonnes by February 2006.

Source: The Hindu dated 30th March, 2006

The Chinese move, according to the reports, is prompted by the Center’s decision to hike duty on iron ore exports. In 2006, China bought more than 74 million tonnes, accounting for about 84 per cent of India's total iron ore exports.

According to informed sources, the Chinese buyers, relying on spot markets, have reacted sharply to India's duty hike proposal. In China, mostly the small and medium steel mills go for spot buying to meet their demands.

"We are keeping a close watch on the situation," observe sources close to three east coast ports which together account for nearly one-fifth of the country's total iron ore exports.

"The impact may be more in the ports where the private exporters comprising both trader-exporters and mine-owning exporters dominate but much remains to be seen."
The private exporters are present in much larger number at Haldia and Paradip than at Visakhapatnam where the bulk of the iron ore traffic handled is for coastal shipment which may not be affected by the proposed hike.

The long-term Japanese buying routed through Visakhapatnam port, too, it is felt, will remain unaffected. The share of the private exporters in Visakhapatnam port's iron ore throughput is around 20 per cent compared to more than 80 per cent at Haldia and Paradip.

Source: Business line dtd March 12th 2007