Ferro chrome producers cheer restoration of export duty

Duty waiver, argue producers, would kill value addition and flood country with cheaper imports from China and Malaysia

The Union government's decision to re-impose the 30% export duty on chrome ore has elicited cheer from the ferro alloys producers. The duty was eliminated in the 2017 Budget. Ferro chrome makers had resented the duty waiver, saying it would kill value addition and flood the country with cheaper imports of ferro chrome from China and Malaysia.

Indian Ferro Alloys Producers' Association (IFAPA) has welcomed the move to restore the export duty.

"IFAPA welcomes the decision of reinstating the duty on chrome ore as it is a very scarce resource for future generations and its always better to do value addition to all ores and export the products", said Manish Sharda, vice chairman, IFAPA.

IFAPA had earlier submitted representations to the Union ministries of steel, finance and commerce, flagging concerns of the ferro alloys producers who were operating in losses and faced the threat of dumping of cheaper products due to removal of export duty. The association pointed out the export duty would also hurt the operations of stainless steel makers where ferro chrome was a vital ingredient.

Indian chrome ore has higher chrome to iron ratio which makes it of better quality. Almost all of India's ferro chrome is produced in Odisha. The high grade chromite reserves are concentrated in Sukinda valley (in Jajpur district) which has balance deposits of only 54 million tonne.

Anil Sureka, managing director, Balasore Alloys said, "The restoration of export duty on chrome ore will stabilise the market for ferro alloys producers. There is shortage of chrome ore in the domestic market and better availability of ore would encourage value addition. The move would also boost exports of ferro chrome ore from the country."

Ferro chrome plants have made huge investment for setting up of manufacturing facilities and are creating jobs, but these industries are suffering low capacity utilization and becoming NPAs (non-performing assets) and financially stressed. The current capacity of ferro chrome making facility is 1.69 million tonne per annum (mtpa) whereas the capacity utilization is only approximately 60%. This is mainly due to non availability of chrome ore and concentrates at viable prices.

Restoration of export duty shall help in bringing some EBITDA (earnings before interest, taxes, depreciation and amortization) margin for the ferro chrome manufacturing companies and help in servicing interest cost which will be beneficial for the banks and the overall economy.

India's chromite reserves were scarce at 56 million tonne, corresponding to a meagre 0.6% of the world's deposits. Around 97% of all chrome ore reserves were concentrated in Odisha.