It seems miners are digging out new routes to evade export duties. Because, every time the government planned to discourage iron ore exports, stand-alone miners ?intelligently? introduced a new grade to escape duty. In 2001, when the government routed the export of high grade (64% and above) through MMTC, miners coined a new grade– 63.5%?which then became the benchmark for exports. It again happened in February 2007 when the finance minister announced export duty of Rs 300 on iron ore with Fe content of 63% and above, a new grade of 62.5% was evolved to escape the duty.
?It is more than evident that blending is happening and high-grade ore is being exported out of the country as low-grade ore. The miners are using this differential duty structure to their advantage,? an official from the Steel Authority of India Ltd said.
Miners are not only evading the export duty by $5 per tonne but also claiming the differential money through their agencies/brokers stationed in Hong Kong, Singapore, Malaysia and Shanghai, says the official.
?We have received strong reports that high grade iron ore are being crushed and blended with low grade iron to escape export duty. High-grade ore is then exported as low-grade iron ore and in the process the government does not get the levied duty,? president Indian Steel Alliance Moosa Raza told FE.
When contacted general secretary Federation of Indian Mineral Industries R K Sharma said: ?while mining the raw material we also get fines iron content as low as 55% for which there are no takers in the international market. The miners, therefore, are left with no choice rather than blending to make the raw material acceptable for the end consumers.?
If fines are not evacuated, production of lumps will be adversely affected. During rains, fines get washed away into rivers/agricultural fields creating environmental problems, Sharma explained.
Similarly, a fter the government announced export duty of Rs 300 per tonne on iron ore having Fe content of 63% and above and Rs 50 for below the 63% category, there was a 33% shift in the export of the two grades of raw material.
Suddenly the export of high-grade iron ore between January and November 2007 dropped to 12 mt from 18 mt in the same period the previous year, while the low-grade iron ore export went up to 24 mt from 18 mt, according to the data compiled by state-owned trading company MMTC.