Steel Ministry demands sops for iron ore beneficiation units

Says exporting the raw material without value-addition will not get desired returns

The Steel Ministry has sought incentives, including zero import duty on machinery for iron ore beneficiation units, saying exporting the raw material without value-addition will not get desired returns.

"We have suggested that the value-addition of iron ore is a must as exporting the raw material minus value-addition does not ensure desired returns and domestic reserves are not in plenty," a Steel Ministry official said.

The official said sops, aimed to encourage domestic firms for setting up pelletisation and beneficiation facilities for adding value to the raw material, as suggested by the Steel Ministry include zero duty on imports of equipment from 2.5% now.

Exports of the raw material in the form of pellets after beneficiation (value addition) will not only ensure higher earnings but also curtail indiscriminate exports, mainly fines which have less iron content, the official said.

To preserve iron ore and discourage its exports, the government had in the last year's Budget reduced basic customs duty on plant and machinery for setting up or substantial expansion of iron ore pellet plants or iron ore beneficiation plants from 7.5% to 2.5%.

Domestic steel makers had cheered this move. Miners, however, alleaged that the move was at the behest of "influential" steel lobby and would ring a death knell for them, especially considering that iron ore exports attract 30% duty.

They were of the view that since domestic steel makers do not use fines, any decision to discourage shipments of this variety would also hamper production of lump ores. Fines would inevitabily come out at the time of mining lumps.

Fines constitute around 92 per cent of the total iron ore exports which stood at 60 million tonnes in 2011-12.