Iron ore lumps to attract duty hike

Commerce and Industry Minister Anand Sharma today said there will be a minor increase in the export duty on iron ore lumps to discourage shipments, though duties on iron ore fines will remain unchanged.

"There will be no increase in the export duty on iron ore fines, but there will be a marginal increase in the export duty on lumps, which we are in agreement (with other ministries)," Sharma told reporters here.

Indian steel makers use iron ore lumps to produce steel. Iron ore fines are primarily exported to countries like China.

The duty hike on iron ore lumps will increase availability of this mineral in the domestic market. At present, iron ore is priced in the range of $120-160 per tonne, up 90 per cent from a year ago, putting input cost pressure on steel companies.

The government at present levies an export duty of 10 per cent on iron ore lumps and 5 per cent on iron ore fines. Sources said the export duty on iron ore lumps could go up by another 5 per cent, but government officials would not confirm this.

Last week, senior officials from the steel, mines, commerce and finance ministries discussed the issue of raising the export duty on these different types of iron ore.

Sharma further said mining itself is an industry which is carried out in backward and tribal regions of the country. The industry provides jobs to millions of people. "So, before taking any decision on increasing export duty, we should take a wholesome view," he added.

The Steel Ministry had last month written to Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee, seeking a two-fold hike in the present duty structure. The ministry wants to discourage outward dispatches as it is of the view that the vital raw material for steel making should be retained for domestic consumption.

In 2008-09, iron ore exports amounted to 106 million tonnes, about 85 per cent of which were fines.