The Confederation of Indian Industry (CII) has urged Union Minister Of Mines, Coal and Parliamentary Affairs, Prahlad Joshi to withdraw the export duty and has written a letter to the Minister citing a drastic fall in low grade iron ore (below 58% Fe) exports. This is primarily due to the 50 percent export duty imposed by the central government in May this year.
The industry body has claimed that the exports have fallen by 92 percent — to 0.23 million tonne in June 2022, from 3.24 million tonne in the same month last year. The iron ore exports is affected as it was already in transit/at ports when the export duty was imposed on May 21.
CII, in its letter, has claimed that while it acknowledges that the government’s decision to impose the export duty was aimed at controlling inflation, there is hardly any demand for low grade ore in the domestic market.
The industry body has warned that if the export duty on low grade ore is not withdrawn, the overall mineral production in the country will reduce due to space constraint caused by the storage of below 58% Fe grade ore within mines. CII has further warned that huge stockpiles of low-grade iron ore fines, which comprise almost 75% of the mined ore, will either cause dust pollution due to winds in summer or water pollution due to rains in monsoon.
There is also a risk of potential impact on the royalty and revenues to states as the material will remain unsold. The continuation of the export duty will severely hit the mining sector, thereby leading to a drop-in economic activity, especially in remote mining regions.
Further, the prices of the material have crashed internationally, making it unviable for a majority of small and medium enterprises to continue operations and moreover there is no domestic outlet/offtake/appetite for iron ore -58% Fe.
Currently, a non-moving stock of over 145 million tonne of mainly low-grade ore is lying at various mine-heads and in dumps in the country. The Indian steel industry consumes only +62% iron ore, unlike other major steel producing country like China, which also consumes low grade ore. Since there is limited domestic market for the material, producers have no option but to export low grade ore which is mainly in the form of fines.
