MinesMin to seek reduction in iron ore fines export duty

Concerned over steep decline in iron ore exports, Mines Ministry will seek from its finance counterpart reduction of duty on fines from the current 30%.

"Ministry of Mines has always opposed the ban on the export of iron ore. Our Ministry had earlier requested to reduce the export duty on fines. My Ministry will again request Ministry of Finance to reduce export duty on fines," Mines Minister Dinsha Patel said here today.

Speaking at the annual general meeting of miners' body Federation of Indian Mineral Industries (FIMI), he said he would also urge the Railways Ministry to reduce the freight for transportation of fines for export as well.

Export duty on fines had been hiked to 30% from just 5% in December, 2009, aimed at discouraging exports. This has resulted a drastic drop in exports of iron ore to just 18 million tonnes last fiscal from over 100 million tonnes earlier.

In fact, India, which was the third largest exporter of iron ore is now set to become a net importer of the raw material. India used to mainly export iron ore fines as there was hardly any takers from Indian steel makers in the absence of necessary technology to use low-grade ore for making iron.

Meanwhle, Patel asked miners to manufacture pellets from fines for export in order to get the benefit of decreased export duty.

"Mines owners should use fines for making pellets and also should make efforts for setting up steel plants in the country with the capablity of utilising fines,"Patel said.

The Indian mining industry is among the highest taxed in the world at 52%. With the additional provisions in the proposed MMDR Bill, 2011, now pending with the Parliament, it is likely to go up to around 60-65%, FIMI said.

Meanwhile, a Mines Ministry - appointed Study Group has in its recently-submitted report recommended increase in the royalty rate for most of the minerals, including 50% hike for iron ore.

"The Study Group constituted for revision of royalty has submitted its report to the ministry. After examining the report, the ministry will take cognizance of prices of metals, the status of mining industry and cess imposed by the states.

"Our ministry would not like to see an increase in royalty which would make mining of any mineral an unviable business," Patel said.