The mining industry has sought removal of 5 per cent export duty on iron ore lumps, a key input in steel-making, saying the tax barrier along with high railway freight has "out-priced" the ore in the global market.

Seeking removal of the duty, the body of domestic miners -- the Federation of Indian Mineral Industries (FIMI)—has shot a letter to Commerce Minister Anand Sharma.

Giving the rationale behind withdrawal of the duty, FIMI Secretary General R K Sharma said the demand for Indian iron ore lumps has started shrinking in Chinese spot market as Australian and Brazilian variants are low-priced.

While freight on board price of Indian iron ore lumps in Chinese spot market is hovering around USD 54-56 a tonne (for ferrous content of 63.5 per cent), the delivered price of Australian and Brazilian ore starts USD 51 per tonne, he said.

Of the country's total iron ore exports of 105 million tonnes in the last fiscal, about 88 per cent was shipped to China which is the biggest export destination for Indian ores.

However, owing to uncompetitive pricing, the exports to China dipped by over 20 per cent in May, Sharma said, adding the merchant miners normally export about 7.4 million tonnes of the raw material to the neighbouring country per month.

Even as the miners want export duty on iron ore to go, the Steel Ministry is pushing for higher tax barrier to curb overseas shipments and encourage value-addition of the raw material by steel mills in the country.