Faced with global downtrend and domestic slump, iron ore industry is in the midst of a serious crisis and country's iron ore exports, including that to Japan, might be seriously impacted on account of very high railway freight, which accounts for about 55 per cent of export realisation.

India's iron ore exports at over 30 million tonnes annually fetch over Rs 2400 crore despite over 10 per cent fall in international prices, sources said.

The commerce ministry has been taking up the issue of high freight tariff periodically with the railway ministry, sources said.

Public sector Kudremukh Iron Ore Corporation (KIOCL) and super star trading house MMTC Ltd account for more than half the country's iron ore exports while the remaining is in the hands of about 10 private players.

Over the last eight years, railwaycharges for freighting iron ores from different mines to ports has shot up between 190 per cent and 223 per cent whereas global prices have come down by 10-12 per cent, rendering Indian exports incompetitive.

More than half the iron ore production estimated at 65 million tonnes from the country is exported and a cut in exports could put the industry in a severe financial pressure, industry sources said.

Japan, which accounts for about 60 per cent of India's iron ore exports, has cut steel production by approximately 10 per cent to 91 million tonnes in the fiscal 1998 and identical trend in the next year could see a drastic fall in its purchase order.

A team of officials of commerce and steel ministry and industry representatives is in Japan to negotiate price and quantity agreement for iron ore exports for the fiscal 1999, sources said.

Increased competition from Australia and other iron ore producing countries could further endanger exports, sources said.

In the last two years when India'sexports came under pressure, iron ore exports at 36 million tonnes recorded over 20 per cent growth in the last fiscal, sources said adding a reversal of trends in this commodity could put further pressure on the already strained foreign trade scenario.

Industry sources indicated that international prices of iron ore might come down by about two dollars a tonne in the international market during 1999 and exporters might incur losses if they fail to cut production and export cost, including freight rates.