The Hindu Business Line : Rising iron ore exports to China...<br> Namakkal truckers on top gear

There has been a surge in the Chinese demand for iron ore; in the year ending March 2004, India exported about 55 million tonnes of iron ore, half of which went to China. This created a substantial demand for trucks and changed the scene of the business in the Namakkal belt.

TRUCK operators of Tamil Nadu's Namakkal belt are delighted that China is importing huge quantities of iron ore from India. Of late, there has been a significant rise in iron ore exports from India to China. In the year ending March 2004, according to media reports, India exported about 55 million tonnes of iron ore, half of which went to China.

The surge in the Chinese demand for iron ore is mainly because of the for mega constructions going on for the 2008 Olympic games in Beijing. According to reports, the capital is spending over $30 billion (over Rs 13,200 crore) preparing for the world's biggest sporting event.

The Chinese demand has led to enhanced activity in Karnataka and Orissa iron ore mines which, in turn, has accelerated the trucking business that is concentrated in and around Namakkal, as also Sankari.

According to Mr M. Ravvichandran of the Chennai-based Anush Shares and Securities, who tracks the commercial vehicle industry, till last year mining companies were transporting by rail the iron ore meant for export.

However, from middle of last year, the cargo began to be transported by road to meet the huge Chinese demand. This also led to an increase in iron ore prices to $60 (about Rs 2,600) per tonne against $35 (Rs 1,540) about a year ago. Further, with shortage of rail wagons and the need for faster mode of transportation, the focus shifted to road transport.

This created a substantial demand for trucks and changed the scene of the business in the Namakkal belt in the last six-seven months, he said.

About 7,000 trucks today engaged in transporting iron ore. Of these about 3,000 trucks are from the Namakkal belt, said Mr Ravvichandran. Looking at the opportunity, truck operators of Namakkal diverted their vehicles to iron ore transportation.

According to Mr Ravvichandran, iron ore transportation offers good rates. At the prevalent rates, truck owners make a net profit of around Rs 1 lakh a month after incurring all expenses, including the EMI payment for vehicles.

The iron ore business also brought many new vehicle owners into the industry resulting in an increased offtake of trucks. With Rs 2 lakh investment (Rs 50,000 for down-payment and Rs 1.5 lakh for body building), vehicle owners made Rs 1 lakh profit, he said.

Says Mr Mohan, a truck-owner of Namakkal, following the iron ore transportation bonanza, in the last six months about 3,000 new trucks were bought in the Namakkal belt.

The freight per tonne for iron ore vehicles running between Bellary and the Mangalore port was around Rs 700. Most vehicles load about 40 tonnes of iron ore, which is more than double the load capacity of a vehicle. While freight is less for iron ore carriers, the vehicle utilisation is more, he said.

Mr Ravvichandran says that in the beginning of the fiscal, there was a lull in trucking business following a drop in agricultural activity. However, in the second and fourth quarters, the truck industry picked up. Though the regular commodity business registered 10-15 per cent growth, the incremental growth came mostly from iron ore transportation. Water tankers and trucks mounted with borewell-drilling rigs also did well, he says.

The momentum in the trucking industry in and around Namakkal, especially the transportation of iron ore business, may however, slow down in the next three-four months. With the South-West monsoon setting in July, mines in Karnataka will close. Further, after rains, the weight of water-soaked iron ore rises so much as to make movement costly, as exporters would have to pay for the increased tonnage, says Mr Ravvichandran. If the mining activity stops, the 7,000-odd trucks transporting iron ore would go back to their base; to Namakkal will return about over 3000 vehicles.

A truck operator of Namakkal said that the pre-monsoon showers had affected iron ore movement in the last ten days. Now truck operators will transport iron ore pellet that is smaller in size, for the next couple of months, he said.

Nobody in the "town of trucks'' knows how long the business of iron ore transportation will sustain.

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