FM ignores mineral sector; iron ore exports set to fall further

The finance minister has not addressed the mining industry's request for a reduction in export duty on iron ore fines to 5% from the existing 30%

The iron ore mining industry fears severe job losses in the tribal and remote areas in the country and also further decline in iron ore exports in the coming year. The mining industry’s main demand for reduction in export duty on iron ore has been completely ignored by the Finance Minister P Chidambaram in the budget for 2013-14.

The mining industry led by Federation of Indian Mineral Industries (FIMI) had sought drastic reduction in export duty on low-grade iron ore fines to 5% from 30% stating that the current rate structure has left shipments unviable. The industry is already burdened with a differential railway freight on iron ore meant for exports.

“There is no relief for the mining industry in the Budget. We are surprised to know that the finance minister’s eyes and ears have not fallen on the mineral sector, which provides large-scale employment in the tribal and remote areas in the country. The ignorance of the finance minister will lead to loss of jobs in the mineral sector,” R K Sharma, secretary general, FIMI said.

The FIMI had requested the finance ministry to slash export duty on iron ore fines and bring it to the level of March 2011, at five%.

Export duty on the key steel-making raw material has gone up from zero in FY09 to 5% in FY10, to 20% in FY11 and to 30% in FY12. “It is totally unviable to export low-grade iron ore with such a high export duty and after paying four times higher railway freight,” Sharma said.

The export of iron ore declined 68.27% in the first 10 months of the current fiscal due to excessive export duty. Between April 2012 and January 2013, the exports have dropped to 16.35 million tonnes compared to 51.52 million tonnes in the corresponding period last year. In January 2013 alone, iron ore exports fell by a staggering over 85% to a negligible 0.79 million tonnes compared to 5.5 million tonnes in the same month of the previous year.