India exports around 300,000 to 400,000 tonnes of chrome ore to China every year.

A number of Chinese product exports to India, like coke, magnesium metal. Calcium carbide have been slapped with anti-dumping duties recently. China unable to defend itself on the merits of the case has now threatened that continued anti-dumping action on Chinese products, would invite boycott of Indian products.

China is a large buyer of iron and chrome ores from India. If China stops or curtails purchase of chrome ore then the chrome mining will come to a standstill or severely affected. Other buyers like Europe are too far and freight is prohibitive and exports are not viable at all.

For the sake of small imports like 1000 tonnes of low carbon ferro chrome into India from China, the $300 million worth chrome ore exports should not be jeopardised, chrome ore exporters state.

Low Carbon ferro chrome in India is produced by Ferro Alloys Corporation Ltd (Facor), the only producer in the country. The other producer Industrial Development Corporation of India (IDC) has closed down its facility since 1994, due to fall in demand as also cheap imports.

Ferro chrome is mainly used by stainless steel producers but the demand for the item has fallen over the years with induction furnace stainless steel producers resorting to modern technology, which uses cheaper high carbon ferro chrome rather than costly low carbon ferro chrome.

Hence the IDC plant saw no hope in producing the item and shifted to high carbon ferro chrome entirely and left the field to Facor.

IDC, however, filed an anti-dumping petition against imports of low carbon ferro chrome from Russia and Kazakstan. The Designated Authority after an investigation imposed on August 9, 1996 on Russian material an anti dumping duty ranging between Rs 10900 to Rs 18600 per tonne depending on the foreign exporters, which was between 30 to 60 per cent of the average import price of Rs 30000 per tonne.

This duty was applicable on goods of Russian origin and these provisional duties were confirmed into final duties on January 24, 1997 for a period of five years. For the purpose of the duty low carbon ferro chrome was defined as having carbon content of 0.03 to 0.2 per cent and chromium content ranging between 65 to 70 per cent.

Similar duties were levied on LCFeCr coming from Kazakstan and duty was a uniform Rs 18600 per tonne. These were over and above the normal import duty of basic 20 per cent.

This no doubt gave temporary relief to Facor but India being a high cost producer of ferro alloys, including low carbon ferro chrome, imports with normal duty of 25 per cent continued from other countries. These exports were mostly from Macedonia, China and South Africa and Facor which was making losses again felt the heat of the world competition.

It was contended that Russian exports were coming through Macedonia and China was also resorting to dumping. South Africa which is the world's largest producer of LCFeCr and supplies the world market, was also drawn into the anti dumping suit filed by Facor.

Facor is one of the largest producers of bulk alloys in India with an installed capacity of over 115,000 tonne, and its range of production includes high carbon ferro chrome, manganese alloys and LCFeCr.

Facor has been incurring huge losses due to high cost of power and low price for high carbon ferro chrome in the world market over the last three years, High carbon ferro chrome prices in the world market during 1999 have fallen to historical low levels, never noticed in the last 25 years and these lows are likely to persist for quite some time eliminating capacities which are high cost all over the world.

Facor is also a BIFR case and its revival is being taken up as it is a large earner of foreign exchange. But LCFeCr. is a small portion of its production of Facor around five per cent and it is also a large exporter of the item at world prices.

Chinese and Macedonian exports may be low priced but South Africa generally exports only to actual users and avoids price wars. China perhaps fearing anti dumping duty on its product on the lines imposed on the Russian and Kazak product has no other option but to threaten curtailing of Indian chrome ore purchases it is for the government of India therefore to take a decision in the matter after all the facts are verified are verified and repercussions considered.