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Ferro chrome makers resent export duty waiver on chrome ore

The waiver would only benefit the merchant miners and kill value addition, they said

Ferro Chrome

Jayajit Dash  |  Bhubaneswar 

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The Union government's decision to lift the 30 per cent export duty on chrome ore and chrome ore concentrates has shocked the makers.

The disgruntled manufacturers, struggling to keep up viability of their operations, have sought the reversal of the announcement made in the Budget for 2016-17. The export duty waiver would only benefit the merchant miners and kill value addition, they said.

Zero export duty on chrome ore would boost exports, accentuating the shortfall of ore in the domestic market and triggering hike in prices of ferro chrome, an ingredient in stainless steel making.

Presently, the capacity of the domestic industry is 1.7 million tonne per annum (mtpa). Against this, the capacity of captive chromite leases held by the ferro chrome manufacturers is only 0.98 mtpa. These units are operating at 52 per cent of their rated capacities and are dependent on merchant miners like Tata Steel and state run Odisha Mining Corporation (OMC) for meeting their requirement.

"Ferro chrome makers have written to the Union mines secretary, pressing for reinstating the export duty on chrome ore. Removal of export duty would not promote value addition and instead boost exports to China, leaving the domestic companies starved of the raw material", said a senior official of a ferro chrome producer.

In the letter to the Union mines secretary, the ferro chrome manufacturers said China has created one of the largest ferro chrome capacities despite being devoid of any chromite reserves.

About 96 per cent of the chrome ore is used to manufacture ferro chrome which in turn is used for making stainless steel.

Subhrakant Panda, managing director, Indian Metals & Ferro Alloys Ltd (IMFA) said, "It is evident that removal of export duty is not in national interest which is best served by incentivising domestic value addition. Besides, with India's share of world reserves being a meagre 0.6 per cent, there is every reason not to deplete it through rampant exports. Hence, we have requested the government to reconsider the decision to remove export duty of 30 per cent on chrome ore which goes against the concept of 'Make in India'."

Almost all of India's ferro chrome is produced in Odisha. The high grade chromite reserves are concentrated in Sukinda valley (in Jajpur district) which has balance deposits of only 54 million tonne. With 3-3.5 million tonne chrome ore being exploited annually, the reserves have a limited life span.

Chrome ore exports from the country have plummeted from 33.28 per cent of annual output in 2007 to 4.89 per cent in 2014. However, the trend is likely to be reversed with the abolition of export duty.

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First Published: Thu, March 31 2016. 17:48 IST