Iron ore shortage: Steel Min demands export duty hike

Concerned over severe shortage of iron ore after the ban on mining in Karnataka, Steel Minister Beni Prasad Verma today said the Finance Ministry should immediately increase the export duty on the raw material to 30%.

"If exports (of iron ore) stop, the problem of iron ore shortage in Karnataka and other states would get solved by and large," Verma told PTI in an interview.

Verma had written a letter to Finance Minister Pranab Mukherjee two weeks ago to increase the duty by 10-30% to discourage iron ore exports.

In this year's Budget, duty on exports of iron ore was increased to a uniform level of 20% on both forms of iron ore, lumps and fines, from 15 and 5% respectively.

"We want to get this (increase in export duty on iron ore) implemented immediately. I had written to them (the Finance Ministry) just at the beginning of the Karnataka crisis," Verma said. The continuous exports of the raw material is a big cause of concern, he added.

The government is also preparing a fact-sheet on problems being faced by steel companies. In about a week's time, it will be presented to the Supreme Court through Attorney General GE Vahanvati, Verma said.

Since August, the steel and the allied industries in Karnataka are facing an acute shortage of iron ore after the apex court banned mining in the state.

The apex court later directed e-auction of 1.5 million tonnes of iron ore per month, lying in Karnataka mines, under the supervision of the court-appointed panel.

The Supreme Court also allowed state-run NMDC, the only company allowed to do mining in the state, to e-auction its iron ore as well one million tonne in a month

The industries in the state, however, feel auctioning of iron ore is not helping them as the prices skyrocket during auctions, while there are no takers for low grade ore (iron ore fines).

Karnataka accounts for almost 25% of the total domestic steel production in a year. Besides, it contributed nearly 20% to the annual iron ore output.

In 2010-11, iron ore exports from the country had come down by 20% to 97.6 million tonne vis-a-vis 117 million tonne in 2009-10, a data gathered by mining industry body FIMI showed.