Miners seek removal of curbs

Country can earn $10 billion foreign exchange by encouraging export of low-grade iron ore

Iron ore miners have urged the government to remove curbs on export of the commodity, saying a level playing field would enable them to earn precious foreign exchange for the country. They said India could earn up to $10 billion in foreign exchange by exporting low-grade iron ore fines, for which there wasn’t much demand from the domestic steel industry.

Reacting to the steel ministry’s argument that the domestic steel industry was capable of using low-grade iron ore and it should not be exported, the Federation of Indian Mineral Industries (Fimi) said Indian steel mills couldn’t use a large quantity of low-grade iron ore fines.

“We need a level playing field for the mining industry. If China can import ore from India and produce steel, Indian steel mills also can do the same. They are already importing coking coal and they can import iron ore as well. steel mills are not too keen to buy low-grade ore. What if Indonesia imposes extra duty on coking coal?” asked Basant Poddar, vice-president of Fimi and managing director of Mineral Enterprises. Fimi and the commerce ministry are pleading for the removal or reduction in export duty from 30 per cent, imposed in 2011.

According to P K Mukherjee, managing director of Sesa Goa, conservation of iron ore couldn’t be the grounds for imposing duty and export restrictions.

“Exports of iron ore fines have come down in the last couple of years. But at the same time, there is no big jump in the export of finished steel. The ministry of mines had acknowledged 100 million tonnes (mt) of iron ore fines were at various mines as of March 31. In Karnataka alone, 7.98 mt of lumps and 6.64 mt of fines are lying at various mines. If domestic steel mills have the capacity to use such low-grade ore, why are such huge stocks of fines left unused?” asked R K Sharma, secretary-general, Fimi.

“Let the finance minister decide in the interest of the industry, and the country at large,” he added.

 

According to P K Mukherjee, managing director, Sesa Goa the conservation of iron ore cannot be the ground for imposing duty and export restrictions. The government should see the merit in imposing tariffs, he said.

 

The ministry of commerce has also argued for removal of export duty on iron ore stating that there is a surplus production available after meeting the requirements of the steel industry mainly consisting of fines and these may be exported. 

 

“The Indian domestic market requires calibrated lump ore and cannot absorb iron ore fines and since 60% of iron ore production is fines this has resulted in accumulation of fines at the mine-head. The excess fines need to be exported till such time as the domestic industry develops capacity to absorb these fines,” the commerce ministry said in a note circulated to Cabinet Committee on Economic Affairs.

 

Sajjan Jindal, chairman and managing director, JSW Steel recently wrote a letter to Prime Minister seeking status quo on iron ore export tariffs. He said the government should retain 30% export duty on iron ore so as to ensure adequate supply of raw material to domestic steel industry. The ministry of steel also recommended for retaining the current duty structure.

 

“There should be level playing field for the domestic mining industry like in China, which buys iron ore from across the world. Why should there be controls on iron ore. If the steel industry can import coking coal, they can import iron ore as well. Moreover, we are only exporting low-grade iron ore, which has no demand in the domestic market. The country can earn $10 billion foreign exchange by exporting low grade iron ore,” said Basant Poddar, Managing Director, Mineral Enterprises Limited, an exporter of iron ore from Karnataka.