Commerce min likely to propose reduction in iron ore export duty

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New Delhi, Aug 17 : The commerce ministry is likely to propose a reduction in export duty on iron ore, which if materialises could help resolve its difference of opinion with the steel ministry over NMDC’s plans to hike prices for the commodity for foreign steel makers under long-term contracts.

It is also planning to put forward a proposal with regard to waiving the additional railway surcharge on iron ore, a key raw material for steel production.

The ministry of commerce is expected to propose before the Cabinet a reduction in export duty from the present 15% ad-valorem to the previous level of Rs 300 a tonne for long-term agreement. It is also seeking a rollback of additional railway freight from Rs 1,000 for overseas shipments of iron ore, sources said.

The proposals aim at making it financially viable for thecountry’s largest iron ore miner NMDC Ltd to export the commodity to Japanese and South Korean steel mills.

NMDC is seeking up to 97% hike in iron ore prices for foreign steel makers for long-term contracts, a move which has not been endorsed by the commerce ministry saying that India and Japan have a long-term bilateral trade relationship.

The commerce ministry is of the view that the entire exercise by NMDC for seeking a higher tariff for exports to Japan and Korea is based on the presumption that its domestic long-term prices would also be revised upwards from Rs 2,546 to Rs 3,510 a tonne (for Baila lumps).

“Given ministry of steel’s steps to control inflationarytrends in steel sector, it is for consideration whether such a steep hike is warranted," the ministry said. The steel ministry has given a go-ahead to the proposed price hike by NMDC saying the rate is being negotiated with foreign steel makers and not between two countries.

In a letter to the steel ministry, NMDC Ltd has sought completely waiving export duty and additional rail surcharge on iron ore saying the partial waiver may not be adequate. The state-run navratna company said that it would have no justification to export iron ore unless the additional cost incurred on railway surcharge and export duty is fully reimbursed to it.

“NMDC’s contention has been that at the least what is expected is complete reimbursement of additional export railway surcharge and full incidence of duty for its xport to Japan/South Korea or its full waiver," NMDC chairman and managing director Rana Som said.