Govt likely to introduce differential export duty for iron ore

Government is likely to introduce differential export duty on iron ore under which producers of low-grade raw material will pay lower rates, a move that will help struggling miners, especially in Goa.
The proposal, if implemented, would see government charging different rates for exports of varied grades of iron ore rather than the present uniform rate of 30 per cent, a highly placed source said.
This follows a representation from the Goa Chief Minister who suggested levying "differential export duty" for the key steel-making raw material.
Traditionally, iron ore is priced on the content of iron in the raw material. Lumps, which contain higher iron ore, cost more than fines that have less iron content.

Goa produces primarily fines. With hardly any buyers in the country for them due to domestic steel makers' lack of technical know-how, fines are primarily exported to China -- the largest consumer of the raw material and largest producer of steel in the world.
The problem with miners of low-grade iron ore stems from the fact that their product prices are lower but they pay the same export duty that producers of lump ore have to shell out.

Worsening the situation for low-grade iron ore miners is the plummeting price of the product in international market following low demand from China.

Falling prices coupled with flat 30 per cent export duty have failed to cheer up miners even as the Goa government has recently started renewing mining leases following a near two-year ban.
India's export of iron ore have come down drastically to 14.42 million tonnes (MT) in the last fiscal compared to 117.37 million tonnes in 2009-10. Miners often blame the 30 per cent export duty rate for the dip in shipments.
India, which used to be the third largest country in the global iron ore export market, is now set to become a net importer of the raw material.

Apex miners' body Federation of Indian Mineral Industries (FIMI) has already pitched for complete withdrawal of export duty of iron ore, reasoning that it would help the country to achieve zero-waste mining.
Ahead of the last Budget, largest private sector miner, Sesa Sterlite, had suggested levying export duty in proportion with the prevailing market price.
"If the price is between USD 70-80 per tonne, export duty can be five per cent. At the same time, it can go up to even 50 per cent when the price is over USD 200 per tonne in the overseas market," company's vice president A N Joshi had said.