Some members of the Parliamentary Standing Committee on Coal and Steel have recommended blanket ban on export of iron ore due to scarcity of the mineral.
In a meeting of the committee in December, some members wondered why there should not be a complete ban on iron ore exports as the demand for the key steel-making raw material is on the rise, sources privy to the matter said.
However, the sources added that the committee is yet to firm up its view and the final report is not yet ready.
India has proven reserves of 285,260 lakh tonnes of iron ore, of which state-run miner NMDC has 15,650 lakh tonnes reserves, as on March 31, 2011. It requires around 1.6 lakh tonnes iron ore to produce one lakh tonne steel.
The existing iron ore reserves will suffice to meet long-term need of steel makers, which have a cumulative installed capacity of around 900 lakh tonnes a year now.
But, India may face an acute crunch as the capacity is expected to rise manifold in the coming years to meet the wide gap in the infrastructure sector.
India mainly exports fines or low-grade iron ores, while lumps, having higher iron content, are used by the domestic steel makers.
Fines constitute around 92% of the total iron ore exports, which stood at 60 million tonnes in 2011-12, down 39% over the previous fiscal.
Aimed at curbing iron ore exports, government has already increased duty progressively from zero in FY'09 to 5% in FY'10, to 20% in FY'11 and to 30% in FY'12.
During the April-November period, iron ore exports have come down to 15 million tonnes, over 62% down compared to a year-ago.
Mines Minister Dinsha Patel had in September 13 last year written to the Finance Ministry to bring down the duty to 15% arguing that the decline in exports has resulted in accumulation of huge quantity at the pitheads.
Meanwhile, miners' body FIMI has also pitched for drastic reduction in export duty on fines to five% saying that the current rate has rendered shipments unviable.
"We have requested the government to slash export duty on iron ore fines in the Budget to the level it existed prior to March 2011, at five%," R K Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI), had said.
"The export duty of 30% on iron ore fines is deterrent to the effective functioning of the Indian mining industry," he added.
The ratio of lumps to fines generation is around 30:70. So for every tonne of production of lumps, about two tonnes of fines are produced. Unless fines are evacuated from the mines, there cannot be further production of lumps for supply to the domestic user industries.