The government is unlikely to entertain the mineral sector’s plea to cut export duty on high-grade iron ore to nil from 30% now in the Budget, as it feels that the important steel-making raw material should be preserved for future use, even as it might lower export duty on low-grade ores to zero from 10% as these ores do not find much application within.
The government had, with effect from April last year, reduced export duty on ore containing less than 58% iron to 10% from 30% earlier, but kept the duty on higher-grade ore at 30%. In their Budget wishlist, members of the Federation of Indian Mining Industries (FIMI) has requested the government to reduce export duty on all grades of iron ore to nil.
“Due to high incidence of export duty on iron ore, exports have declined from 117.37 MT (million tonne) in 2009-10 to a meagre 6.12 MT in 2014-15. India is fast loosing out its competitiveness in global markets. The share of India in iron ore export to China has come down from 20% in 2008 to less than 0.5% in 2014. Therefore, the industry requests government to bring export duty on iron ore from 30% to nil for all the grades,” FIMI said.
The mines ministry, however, is of the view that India should preserve the higher grade of the raw material given the country’s projected growing need for use in the steel-making. India’s steel production is projected to grow nearly three-fold to 300 MT by 2025. It takes roughly 1.6 MT high-grade iron ore to produce each MT of steel.
“There is no need to lower export duty on lumps or higher grade of the raw materiel, particularly when the industry admits that almost 92% of India’s total iron ore export constitutes of fines or low-grade ores,” said a senior mines ministry official.
India mostly exports fines, which are generated as a co-product while producing lumps. For every tonne of lumps production, about 2 tonne of fines are produced. However, with limited technology available within the country, exports of fines is a compulsion for domestic miners.
