Rollback export duty hike on iron ore: FIMI to FM

The Federation of Indian Mineral Industries (FIMI) today requested the Finance Ministry to roll back export duty hike on iron ore to enable the industry free from "suspended animation".

"We would be grateful if you consider sympathetically rolling back the increase in export duty to pre-Budget 2011-12 level," FIMI Secretary General R K Sharma wrote in a letter to Finance Minister Pranab Mukherjee.

The hike in export duty would keep the domestic iron ore industry in a suspended animation in which illegal miners would reap benefits, he added.

The Centre raised export duty on fines fourfold to 20% in the Budget 2011-12. The country had shipped over 100 million tonne of iron ore in 2009-10 and 70-80% of that was in the form of fines.

For lumps, the duty has been upped to 20% from 15% earlier.

"Such increases in export duty under pressure from steel body and the Ministry of Steel keep the iron ore industry on tenterhooks and do not allow to generate surplus to invest in exploration," Sharma said.

Indian steel makers mostly use lumps and the requirement of fines do not exceed 30 million tonne a year as two major firms, SAIL and Tata Steel, use fines produced from captive mines. The plants, which do not have own mines, procure fines from non-captive standalone mines, including NMDC.

The total demand for iron ore by the Indian steel industry is about 102 million tonne against the domestic iron ore production, including stock-pile at the mine-heads, of 299 million tonne, Sharma said.

Following announcement of the hike in export duty, the spot prices of Indian iron ore have plummeted to around $150 per tonne against $160-165 a tonne for 63% FE prior to the Budget, he said.

The Railways has also raised freight on iron ore meant for exports by Rs 100 a tonne to Rs 1,600 a tonne with effect from March 1.

"The increase in export duty and railway freight have affected the iron ore industry very adversely," Sharma wrote.