Goa miners approach PMO on removing export duty on iron ore

Miners say it will help in higher revenues of $750 million a year

Mineral ore exporters body from Goa has approached the PMO seeking removal of export duty on iron ore, saying it will help in higher revenues of $750 million a year.

Industry body Goa Mineral Ore Exporters Association (GMOEA) has written to the Prime Minister's Office urging it to remove the 10% export duty on iron ore fines with Fe content below 58% and the 30% export duty on iron ore lumps irrespective of grade, sources said.

Besides, GMOEA has also urged Prime Minister Narendra Modi to consider removing duty on fines above 58% Fe content, which is 30% at present, they added.

Goa mainly produces low grade iron ore (with iron content between 55-58%), which is exported to countries such as China and Japan. Iron ore is the key ingredient used for making steel.

Goan iron ore is not consumed by the India steel firms as it requires higher quantity of coking coal, which is mainly imported, as well as the inland freight and logistics costs makes it uneconomical.

The industry body counters that prices of iron ore with Fe content of 56% have nose-dived from $119 per tonne FOB Goa in January 2011 to $21 a tonne in November 2015, making it unviable for miners to extract the ore with the current tax mechanism.

"The industry has to contend with extremely high percentage of taxes to the tune of 40% even for low grade of iron ore, which makes the industry uncompetitive," it said.

Citing Australia's example, GMOEA said the government there has withdrawn the Mineral Resource Tax as well as deferred the Royalty on the current production.

"Major global suppliers in Australia and Brazil are flooding the international market with iron ore having reduced their costs to a level of merely $15-20 per tonne FOB including taxes, which are to the tune of just 2-7.5%," the industry body added.

Export of low grade iron ore from Goa needs to be encouraged as it can fetch revenues of around $750 million per year (over Rs 5,000 crore) from export of the ore, which would be otherwise wasted, GMOEA said.