Iron ore, it appears, would be at the centre of debate once again just before the Budget. Icrier?an independent think tank?is conducting a study on iron ore export. The study will lok at the benefitsas well as drawbacks of iron ore exports. It has already started incorporating viewpoints of various ministries and industries related to iron ore. The study is likely to be released before the Budget.
The Icrier study would be significant, as the steel and the mining industry are already at loggerheads over the issue. While the mining industry has been demanding complete withdrawal of export tax imposed in the current Budget, the steel industry has been demanding phase out of iron ore export, claiming that at its current pace, the country would exhaust its iron ore reserves by 2030.
The finance ministry has imposed export tax of Rs 300/tonne for iron ore having 62+ FE content, while Rs 50 for iron ore containing less than 62+ FE content. India produces 180 million tonnes of iron ore every year, of which 90 million tonnes are exported annually. India?s total iron ore reserves is estimated to be 24 billion tones. Around 1 million steel production requires 1.6 million tonnes of iron ore. At present, the country produces roughly 50 million tones of steel. As per the national steel policy, India would produce 80 metric tonne of steel by 2011-12.
The mining industry on the other hand, claims that it exports primarily iron ore fines, which are not used by steel companies as they use iron ore lumps. Hence, iron ore exports in no matter affects steel companies. The group of ministers on mineral policy headed by home minister Shivraj Patil, has suggested no ban on iron ore exports.