The ministry of mines has turned down the iron ore industry's demand that ore with up to 62% iron content be not subject to export duty. Currently, exports of iron ore, for both lumps and fines varieties, of 58% Fe content and above attract a 30% duty.
The ministry of mines has turned down the iron ore industry’s demand that ore with up to 62% iron content be not subject to export duty. Currently, exports of iron ore, for both lumps and fines varieties, of 58% Fe content and above attract a 30% duty.
A mines ministry official said since there’s a glut in the international market for some time now owing to lack of demand from the steel industry, lowering duty will not help. So, the ministry won’t pitch for any change in the duty structure with the finance ministry, the official added.
Hit by poor demand, state-run NMDC has lowered prices of the steel-making raw material between `750 and `950 per tonne in less than five months.
In a representation to the mines ministry, miners argued that since domestic steelmakers do not use iron ore having less than 62% Fe content, there should not be any duty on exports of these products. They also argued that lack of use of this material was only causing unnecessary stockpiles in the mineheads and coming in the way of production.
“It is suggested that the export duty on iron ore which is at the rate of 30% on +58% Fe should be completely abolished up to 62% Fe content,” miners’ body Federation of Indian Mineral Industries (FIMI) said in a letter to the ministry.
Mainly with the aim of preserving natural resources, India has been increasing export duty on iron ore from time to time. While exports of iron ore fines used to attract only 5% duty back in 2009, a uniform 20% duty was imposed on both lumps and fines since March 2011. This was further raised to 30% for both varieties with effect from December 2011. With effect from March 1, 2016, the existing rate has been prevailing.
FIMI said over 150 million tonne of iron ore of up to 62% Fe content stockpiles are lying at the mine-heads which are not required by the steel industry. Since majority of the mines are small and have space constraints, the stockpiles are limiting the production. Evacuation of these stockpiles will thus also enhance production.
“The surplus stock containing less than 62% Fe content which is not in demand by the domestic industry can be easily monetised into foreign exchange by means of export. However, because of 30% export duty, it is not viable to export due to prevailing international prices,” FIMI said.
Interestingly, India’s iron ore imports have gone up in recent times to 8.7 million tonne in 2017-18. India had imported 4.60 million tonne in 2016-17.