Mines ministry unlikely to lift export duty on high grade iron ore

Fimi, Odisha and Jharkhand have been lobbying for removal of 30% export duty on high grade ore

The central mines ministry is unlikely to entertain proposals from iron ore rich states of Odisha and Jharkhand to waive off the prevailing 30 per cent export duty on high grade ore. Both the states along with top mining body Federation of Indian Mineral Industries (Fimi) have been lobbying for removal of the duty that is deterring exports.

The stockpile of iron ore at pitheads in Odisha, Jharkhand and Goa has been escalating. According to data by Indian Bureau of Mines (IBM), the inventory (at the end of March 2016) has gone up to 186 million tonne (mt) and of this, fines alone account for around 150 mt. With not much of domestic demand to absorb the glut, export of the iron ore was the only viable outlet provided the steep export tax was scrapped.

"We have been appealing to the mines ministry to exempt high grade iron ore from exports. But, the steel ministry is opposed to the idea. Steel industries and pellet manufacturers are also not okay with the proposal to lift export duty", said R K Sharma, secretary general, Fimi.

A section of the steel industry and pellet manufacturers feel incentivising exports by withdrawing export tax will trigger hike in domestic prices of iron ore. More recently, Odisha miners have hiked prices of iron ore prices by up to Rs 200 per tonne despite softening prices in the international market.

The central government in 2016-17 Budget announced the waiver of export duty on low grade iron ore lumps and fines (with iron content of less than 58 per cent). Since then, exports have gained some momentum but the big gainer is Goa which predominantly produces low grade ore unsuitable for value addition.

Since 2009-10, iron ore exports from the country have been drastically falling as the government looks to protect the local steel industry. From the peak level of 117.4 mt, exports have dwindled to 6.12 mt in 2014-15 and a little over five mt in last fiscal.