Iron ore miners urge govt to abolish export duty

Claims 30% levy to discourage ore exports and promote domestic steel production is counter-productive

Mineral exporters have urged the government to abolish export duty to compete with other suppliers in global markets and make way for further excavation at mine sites.

In a pre-Budget submission to Finance Minister Arun Jaitley, Kolkata-based Indian Ore Exporters’ Association, a body represented by hundreds of iron ore miners in the eastern states, argued that low-grade iron ore mined is used by domestic steel mills.

So, high-grade iron, which is unused, should be encouraged for better exploitation of sites.

“The government levied 30 per cent export duty to discourage exports of iron ore, to promote steel production in India and to conserve natural resources. To protect the interest of miners, the government rolled out incentives to build pellet plants to utilise the iron ore fines. Unfortunately, these pellets units also used high-grade iron ore (lumps) leaving problems of fines unresolved. Keeping ore stocks for long period results in spilling over to adjoining areas and also into water bodies. This needs to be prevented. The only way to prevent such spread is to encourage exports which will be possible only after abolishing duty immediately,” said P K Chaki, secretary, Iron Ore Exporters’ Association.

Normally 65 per cent of fines are generated to produce 35 per cent of calibrated (desired size) ore. These low grade fines particularly of Fe content below 60 per cent had very little or no commercial demand in India till 2003 and therefore, used as landfills. Suddenly, on Chinese steel boom between after that, Indian exporters found heavy demand for production of steel. So, out of 220 million tonnes of output in 2009, 125 million tonnes were exported of which 110 million tonnes to China alone.

According to informed sources, there is a massive stock of iron ore stored at the eastern coast of Odisha which awaits duty reduction for exports to China to compete with other global suppliers including Australia and Brazil.

R K Sharma, secretary-general of the apex industry body - the Federation of Indian Mineral Industries (FIMI), said, "There is no need for export duty on minerals. Hence, it should be abolished immediately to encourage mining."

The government levied five per cent export duty on pellets, 10 per cent on bauxite and 30 per cent on chromite and iron ore.