Sponge iron makers ask govt to impose 30% export duty on pellets

Sponge iron makers have urged the government to impose a 30% export duty on pellets, an improvised version of iron ore, which attracts zero duty currently. Both iron ore fines and lumps having 58% and above iron content attract 30% export duty now.

“We request you to kindly consider our proposal for levy of 30% export duty on iron ore pellets and ban all exports above 63% Fe to safeguard the domestic steel producers especially the secondary steel producers having no captive iron ore mine,” Chhattisgarh Sponge Iron Manufacturers’ Association has written to Prime Minister Narendra Modi.

India exported 12.6 million tonne (MT) pellets in 2019-20, up from 9.3 MT a year ago.

Sponge iron makers use pellets as their raw material. India is the world’s largest producer of sponge iron, a substitute of scrap, used in the production of billets, blooms and other semi-finished products. India’s sponge iron production rose to 37.14 MT in 2019-20 from 22.43 MT in 2015-16.

“Steel is the key for infrastructure development and government intends to spend Rs 100 lakh crore for development of world-class infrastructure. If the raw material prices for making of steel comes down, the cost of producing and eventually, the sale price of steel will also be competitive ,” it said.

Restricting exports of iron ore pellets would help in bringing down the steel prices in the country at affordable levels which in turn will help in increasing consumption of steel.

“Iran is the second-largest producer of sponge iron in the world and is growing at a pace of 10-12% annually because it has levied 25% export duty on pellet to focus on further value addition,” said Anil Nachrani, President, Chhattisgarh Sponge Iron Manufacturers’ Association.

Also batting for introduction of export duty on pellets, Orissa Sponge Iron Manufacturers’ Association, in a separate letter to the Prime Minister, has said, “Pellets are allowed to be exported freely without any export duty. To improve availability (for domestic sponge iron makers), export of pellets is to be restricted.”

West Bengal Sponge Iron Manufacturers’ Association, in yet another letter to the Prime Minister, said, “Out of the total saleable iron ore pellets (after captive consumption) available in the market, more than 60% of it is being exported out of the country at zero duty. Hardly any beneficiation is being done and more than 90% iron ore fines of high grade are directly being used for pellet making and exporting the same is actually against the vision of making 300 MT steel by 2030.”